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Estate Planning More Than a Will

Proper estate planning involves careful thought and examination of all assets, however big or small your estate might be.

For many, estate planning is a fancy way of preparing a will. However, the two are certainly not one in the same, and the belief that they are is just one of the many common misconceptions about estate planning.

Estate planning is one of the most important things a person can do, lest they risk putting the fruits of their life’s labor in jeopardy. With such important consequences, it’s good for anyone involved in estate planning to consider the following.

• Understanding probate and what you can do about it. Probate is the legal process wherein a person’s will or estate is renewed before title can be transferred from the decedent’s name into that of the living beneficiaries. Some people believe a good will can avoid probate and that transfer of assets will occur immediately. In fact, a will often mandates probate, and the process of asset transfer can take anywhere from a few months to several years. For people with property in different states, a probate hearing is often required in each state where property is owned. It’s important to note, however, that probate can be avoided. Each case is individual, yet there are ways around timely and ultimately expensive probate. Discussing the different avenues available to avoid probate is a good start to estate planning.

• States can dictate where your assets go if you don’t. This is arguably the greatest reason why all people should have a will. Even if you’re a young parent in seemingly perfect health, you should have a will. A common misconception is that people with limited assets don’t need a will, as common sense will dictate which of their family members will get what they have when they pass away. However, some states have laws wherein a decedent’s assets are distributed by the state if the decedent does not have a will. Even if your estate is small, your assets won’t necessarily be distributed according to your intentions if you don’t have a written record of those intentions.

• Even jointly shared assets require estate planning. Some people feel that jointly shared assets are a way around estate planning. While it’s true that jointly shared assets can avoid probate (until the last owner’s death, that is), jointly shared assets might be subject to estate or gift taxes. In addition, jointly shared assets are subject to creditors of all owners, which can create problems. Finally, if a decedent with jointly shared assets did not intend for those assets to be transferred to the other owner upon the decedent’s death, without an estate plan, the surviving joint owner will have all assets transferred to him.

• Estate planning is for you as well. Estate planning is not done simply to ensure your family’s financial security upon your passing. While a will is expressly concerned with dividing your estate upon your death, estate planning can (and should) provide for you during your lifetime, should you become incapacitated due to old age, illness or an accident. In addition, estate planning is important so you can establish a durable power or attorney and a medical durable power or attorney. In doing so, you’re designating someone who can make financial decisions on your behalf should you fall ill (durable power of attorney) and medical decisions on your behalf (medical durable power of attorney).

• Get an attorney. Different states have many different laws with respect to a decedent’s estate. An estate planning attorney can professionally draft all necessary documents and make sure they conform with your state’s laws. Such documents are then less open to challenges upon your death. Oftentimes, improperly drawn up wills are invalid in court. To truly protect your family from any added stress upon your death, an estate planning attorney is a worthwhile and not necessarily costly expense.

Each and every day, families fall victim to poor estate planning. To avoid such a fate, begin your estate planning as soon as possible.

 

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