What is Estate Planning?

What is Estate Planning?

Estate Planning is simply the process of organizing your assets and deciding how you want what you own to be distributed after you die. A good estate plan generally consists of the following:      

Living Will Pour-Over Will Living Trust Health Care Power of Attorney General Durable Power of Attorney Funding

Is there a Difference between a Will and a Living Trust?

A Will: Alone says who you hope your property will go to and probate will almost always occur.

Is a public process that may create conflict?

A Living Trust: Allows you to do funding of the Living Trust and more importantly, who will control your assets.

Trustees will be able to handle your affairs regardless of their personal status.

Probate does not happen if funded and designed properly.

What are Powers of Attorney?

Financial Power of Attorney:

Enables the agent to manage and sell property or exercise rights that are still in your name as opposed to a property Trust.

Healthcare Power of Attorney: Allows your named primary and alternative agents to make healthcare decisions for you when you cannot make these decisions on your own. This document also sets guidelines regarding your healthcare decisions.

Healthcare POA and Living Will equals YOUR Directive These signed documents can provide a directive to your healthcare provider not to artificially sustain life when there is no hope recovery. This is also known as a “pull the plug” directive to prevent you from living in a coma or vegetative state. Healthcare providers require a Living Will when you are hospitalized.

Guardianship: Guardianship is a legal connection of responsibility formed when a person or organization is either identified in a will or designated by the court to take care of children under the age of 18 or sick and incompetent adults.

The Guardian is responsible for the affairs of the minor child or adult, which can include care, education, medical decisions and maintenance. The guardian should not benefit at the expense of those in their care.

What is Probate?

Even if you do not know what probate is, the word instills fear into people. Probate is the legal process of resolving any claims and transferring property of an estate after a person dies, to those who may inherit the property under the court’s direction.

Without the right Estate Planning strategies stated above, Probate is public and anyone can go to court to try to seize your assets including property, money, or other assets.

Probate involves proving the deceased person’s will is valid and creditors are also notified of probate hearings. Taxes will be paid and debts are resolved and hopefully, your remaining property will go to your intended heirs or charities. This process usually proves to be very expense, long, and heartbreaking for those involved.

How to Avoid Probate?

Besides proper estate planning, there are some other tips and tricks that one should consider. If you have life insurance, you may not want all of your death benefit going to your trust. The reason is very simple. If you have $500,000 in death benefit going to your trust, the attorney and trustee fees of usually 5-10% are counted. For example, if your property, money, and investments add up to be $500,000 and you add an additional $500,000, your family just lost and additional $5,000 in fees and this could be much higher.

Also, if you have kids from a previous marriage, you should designate a portion of your life insurance and annuities directly to them. All life insurance and annuity contracts avoid probate and in many states also offer unlimited cash value protection from creditors.

If you do not leave a record of your wishes and set the legal foundation for protecting your property and family, the courts will decide the fate of your property and posterity. Protecting yourself with an estate planning today will save your family headaches in the future. Property Estate Planning today is essential to providing the execution of your wishes and for your friends, family, or charities the mental and financial frustration that comes with going through years of probate hearings.

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