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Estate planning is one of the core responsibilities of adulthood. Unfortunately, it is something that is often overlooked. Surveys have found that the majority of adults in the United States have not executed all of the necessary estate planning documents. There are various reasons for this lack of preparation. Death is not the most pleasant subject in the world to contemplate, and this is part of the equation. Even those who recognize the need often put estate planning on the back burner because they feel as though they will have plenty of time to prepare later on. While we all hope to live long and healthy lives, there are no guarantees. Those who go through life without an estate plan are putting their family members at risk. Some have argued that estate planning is more important for younger adults than it is for senior citizens. This is because the children of senior citizens are generally going to be selfsupporting adults in their own right. Younger people may have dependent children in the home. If both parents were to pass away in an accident, who would care for the children if there is no plan in place? Where would the money come from? The above questions are even more profound for single parents of minor children. Another reason why some people fail to act is because they simply don't know where to begin. With this in mind, we would like to take a look at some estate planning basics.
Estate planning is one of the core responsibilities of adulthood. Unfortunately, it is something that is often overlooked.
Last Wills
One of the things to consider will be the transfer of your assets to your loved ones after you pass away. Many people do this through the execution of a last will.
Probate can be timeconsuming, and there are expenses that go along within the process.
If you do utilize a will to arrange for the distribution of your financial resources, you should include the selection of an executor or personal representative in your will. This is the person who will do what is necessary to actualize the written instructions. The parents of minor children should nominate a guardian who would be empowered to raise the children should the parents pass away. The property that comprises your estate will not be distributed to the heirs until the estate has been probated when you use a last will to direct asset transfers. Probate can be time-consuming, and there are expenses that go along with the process.
Probate can be timeconsuming, and there are expenses that go along within the process.
Avoiding Probate
There are various different ways that you can arrange for assets to be distributed to your loved ones outside of the probate process. One of these would be to convey resources into a revocable living trust. With revocable living trusts you may act as the beneficiary and the trustee while you are alive and of sound mind. This is appealing to many because you are not surrendering any personal control of the resources. You create a trust agreement, and you set forth terms.
While you are creating the agreement, you include the selection of a successor trustee to administer the funds after your passing or in the event of your incapacitation. Your heir or heirs would be named as the beneficiary or beneficiaries. The trustee would distribute assets to your beneficiaries after your passing according to your wishes as stated in the trust agreement.
For these individuals and others asset protection is important. There are ways to position your resources with asset protection in mind. Viable solutions include family limited partnerships and limited liability companies. The federal estate tax carries a $5.25 million exclusion in 2013, and the maximum rate of the tax is 40%. People who have assets that exceed $5.25 million in total value must take steps to gain estate tax efficiency. There are many different ways to position your assets with tax efficiency in mind. The optimal course of action will vary on a case-by-case basis, but irrevocable trusts are often part of the equation.
you are creating an estate plan. There may come a time when you are not capable of making your own decisions due to ill health. With durable powers of attorney, you can select people to make decisions for you if you become unable to make them for yourself. Many people will execute two different durable powers of attorney: one for health care decisions, and one for financial decision-making. A living will is an advance directive that is also recommended. With this document you state your preferences regarding the utilization of life-sustaining measures under circumstances where there is no hope of recovery.
Conclusion
Without question, estate planning is a must for all responsible adults. If you do not currently have a plan in place, action is required. The simplest solution would be to schedule a consultation with a licensed estate planning attorney. Your lawyer will evaluate your circumstances, gain an understanding of your wishes, and make the appropriate recommendations.
References
Forbes http://www.forbes.com/sites/janetnovack/2012/10/14/theforbes-guide-to-estate-planning/
Roy is certified as a Legal Specialist in Estate Planning, Trust and Probate Law by the California State Bar Board of Legal Specialization.
3425 S. Bascom Ave, Suite 240 Campbell, CA 95008 Phone: (408) 356-9200 www.attorneyoffice.com