Estate Planning : More
than just a willEstate
Planning is a process by which a person designs a strategy and prepares
documents to transfer the assets accumulated during a lifetime of work and
savings to intended beneficiaries.
Working hard and living frugally, most people create and build net worth. They
generate savings in bank accounts, purchase a home, and acquire other
investments such as stocks, bonds, mutual funds, IRAs and 401-K plans. Proper
planning will insure that these assets are passed onto loved ones with a minimum
of taxation.
Recent surveys have revealed that over forty
percent of the population have no will. In those situations, state writes a will
for the person dying. The state written will seldom makes sense. The family of
the person dying without a will must spend needlessly to qualify for the
administration of the estate and purchase a bond. OPPOSITIONALDEFIANTDISORDER-ADHD
In estates of more than $1,000,000, federal
estate tax is a consideration. These taxes can usually be avoided or at least
minimized. Traditionally, an estate plan was simply a will. However, with the
growing medical needs of an aging population, as well as the ever present
specter of the Internal Revenue Service, prudent estate planning requires
additional protections for all of us. Even the best written will has little
value if one's assets are depleted in later years by health care costs which can
be mitigated or borne by someone else.
Any prudent estate plan
should address three questions:
(1) Where do I want my money to go after my
death?
(2) How can I protect my estate and myself if I become disabled?
(3) Do I want my life to be extended by life support even though a medical
event has left me in critical condition without any hope of recovery?
In many instances, these questions should be
answered by considering lawful methods to avoid taxation and to minimize
possible nursing home costs. The documents, which are necessary to answer these
questions, are a will, living will and power of attorney.
A will
declares who shall inherit an individual's assets (the beneficiaries) and who
shall be responsible for distributing them to such beneficiaries (the executor).
For young parents and couples, a will can also be used to appoint a guardian for
their children and a trustee to manage a child's money until they are old enough
to handle it themselves.
A Power of Attorney should be executed
appointing an agent to protect ones person and property in the event of
disability. Individuals, who become disabled mentally and do not have a power of
attorney, can only be protected by an expensive and humiliating procedure known
as a guardianship, whereby they are judged to "incompetent" in the public forum
of a court.
A living will or advance directive should be
signed to set forth ones intentions in a situation where there is no reasonable
hope of their recovery or regaining a meaningful quality of life. A living will
is often combined with a healthcare power of attorney appointing a loved one as
healthcare representative to assist in making end of life decisions.
An often overlooked aspect of estate planning is the coordination of benefits. A
will disposes of assets forming part of the probate estate. The probate estate
or assets only in the name of the decedent. Jointly owned property, life
insurance, retirement plans, annuities and other assets pass outside the probate
estate and are not governed by the will. All of these assets must be coordinated
to accomplish the individuals estate plan.
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