Estate planning has become very popular amongst citizens recently. People’s interest in making an estate plan for securing their family’s life after their death has increased in recent years. Many times estate planning cost a fortune if done through an attorney. So, people hire an attorney with the idea that estate planning is difficult. They seek professional advice from the attorney during executing an estate plan.
Consideration of estate planning as difficult is a myth. An individual with some knowledge in the probate laws can execute estate planning. Executing estate planning on your own can eliminate the need of an attorney lawyer in estate planning.
Hence, you must know that before starting to frame the estate plan you must have knowledge of different estate related things. Under which law estate planning is done and what are the documents needed in an estate plan are some important things to know.
Let us discuss about some estate planning issues that you must have knowledge of before doing estate planning:
1. Will in Estate Planning
A will is a legal document in which the testator specifies his/her intends on the assets he/she owns. The testator instructs how his/her assets are to be distributed among the heirs and beneficiaries through this will.
The testator has named an executor in his/her will. The executor is responsible to execute the will after the testator’s death. The executor has the authority to sell the assets owned by the decedent to pay off the dues. After clearing out the dues, the heir and beneficiaries get the remaining fund.
Hence, the probate process executes the will of the deceased.
2. Trust in Estate Planning
Probate process is an expensive process and consumes a lot of time. If an individual doesn’t want his/her heirs to go through this process then trust is the best way to go.
If the individual holds his/her property in a living trust then the properties transfers to the heir without going through a probate process. The heirs will be free from the burden of running to the court and spending a lot of money.
So, if you want to avoid the probate process, then you must include trust in your estate planning.
3. Healthcare Power of Attorney
Through this power of attorney you can authorise a person to take your healthcare decisions in case you become disable. You should choose a person whose thought process and point of view matches with yours. A similar thought process can guarantee agreement of both the parties to a particular decision.
The authorised person takes decision like:
- Where the treatment should be done?
- How much amount should be spent?
The person authorised should have proper skills to deal with every unwanted situation.
4. Financial Power of Attorney
Financial power of attorney authorizes a person to handle and manage all of your financial affairs. In case you become incapacitated or disabled, the authorised person will handle all the dealings related to your property and finances.
Handling the finances is not an easy task and requires a lot of skills. The person authorised with this responsibility should be intellectual and competent to handle any situation. The person should also be trustworthy.
5. Beneficiaries in Estate Planning
You should name beneficiaries for your pension account, savings account and retirement funds account,if any. The funds in these accounts transfer to the beneficiaries account after your death. In this case, the beneficiaries don’t have to go through a probate process.
You can also name beneficiaries in stock, bond and brokerage accounts.
6. Estate taxes
The estate taxes are a big burden and decreases the fund amount you have left for your spouse and children. The federal government charges a tax on your estates during the probation process, this tax is known as estate tax.
In the USA, estate taxes are imposed if the estate amount is more than $5.49 million. If the amount is less than this then the taxes are exempted.
You can avoid giving taxes by donating to charitable trusts and transferring your funds or properties to a trust. You can skip the probation process by choosing trust over will.
An estate planning is an easy process, if an individual is aware of all the laws and documents requirements to frame an estate plan. Considering the above points can help you to frame an estate plan without going through any burden. Estate planning done on its own saves a lot of money.