4 Steps to effective Estate Planning
What is estate planning?
It plans (development of a series of steps ahead to achieve a particular goal) of their assets (land titles, control and eventual transfer of all your stuff to others).
Estate planning is done to determine how their affairs will be handled when and if certain events occur such as disability, incapacity or death. This is done by developing a plan and its implementation through various legal documents and processes.
1) First, one must have a will of last update and testament. This is the document that is read in probate court in its path, which gives the court its wishes regarding the disposition of your probate assets (those assets that only in your name so there is no named beneficiary or other names, such as joint ownership, etc.).
Minimization of probate is considered a good idea because the costs can vary succession in the range of 5-8% of the value of the assets that pass through the succession process.
2) Whenever possible will be the owner of an asset or title in a way that avoids the cost and public disclosure of probate. This can be accomplished in several ways:
A) Some types of assets have named beneficiaries. The recipient is a person or group that has the legal right to claim assets after his death. Type of assets that are named beneficiaries of retirement accounts like IRA, 401k, pension, life insurance and annuities.
At his death, all assets that the beneficiaries will be transferred directly to them and bypass probate. It is recommended that these beneficiaries are reviewed periodically to ensure they are properly designated to carry out your wishes.
B) Other assets may be owned jointly with another person. This could include real estate, bank accounts, investment accounts, etc. When an owner dies, then joint owner becomes the sole owner of the property and probate is avoided.
CAUTION: Some people may believe that owning assets jointly with your children also avoid inheritance tax. Not so, while avoiding probate with the property Together, the assets in general, be included in calculating inheritance tax.
C) Other ways to avoid probate may include POD (of Payment On Death) accounts. This is a designation in a bank account that allows the proceeds of the account payable to a designated person or group after the death of the owner of the account.
TOD (Transfer on Death) accounts are the names of brokerage accounts that enable investment holdings to be transferred to a named person or group on the death of the account holder.
D) Being the owner of the assets in different types of trusts can also avoid probate. Trusts can be used to perform many different types of goals, and to protect assets from taxes, public disclosure, and the costs of tests and procedures.
Estate planning also states your wishes if you become disabled and can not speak for itself.
3) A durable power of attorney for health care is a document that states your wishes for health care during incapacity and the name of a person who will make decisions on their behalf. Durable means that is in force for the duration of your disability.
A durable power of attorney states to act on its behalf in financial and legal matters during his disability.
4) A living will is a document that states your wishes regarding end of life decisions such as life support issues.
These documents are very important and are an integral part of effective succession planning. If any of these are not present, then the succession plan is not complete and will be ineffective insofar as such details are not addressed.
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