Estate Planning is an
integral aspect of life. It is not something to be left for the chosen few, but
instead should be done by each and every individual. Knowing that no one in
this world will escape the hand of death, we should all purpose to exit comfortably
by ensuring that those whom we leave behind are fully aware of all possessions
we had in our name.
You may wonder whether
you really have any asset or estate. The truth is, we all have something we can
claim to be ours. It may not be a row of apartments in one of Los Angeles’s
leafy suburbs or a fleet of lamborghinis. Even the clothes well arranged in
your closet serve as assets.
In case you were to die
today, it is in order for you to have planned how your clothes should be
disposed of, whether to donate to your favorite charity or pass them down to
your sibling. A simple fact is that no one will take their possessions with
them to the grave. That is why planning in advance on how they should be
handled after your demise is essential.
Estate planning can
therefore be described as thorough guidelines outlined by an individual which
state who is to receive which possessions and how their assets ought to be
distributed upon their demise. Estate planning is a gradual and thoughtful
process which takes into consideration several aspects.
Why Is Estate
Planning Important?
Some of us have grown up
thinking that estate planning is only done by the elderly population who are in
their sunset years. However, that is considered a great misconception. No one
is guaranteed of tomorrow, therefore estate planning ought to begin as soon as
you become an adult. We can blame this misconception on a lack of awareness on
our part as citizens. That is okay. Nevertheless, times have changed and we
thrive in an information era. Knowledge has immensely become accessible. It is
therefore imperative for us to educate ourselves on life matters such as estate
planning. Importance of estate planning can be summarized as follows:
- A thorough estate planning process
ensures that all your hard-earned assets are protected from any unforeseen
incidences such as creditors who may forcefully use your assets as collateral. - Estate planning also gives you
authority to enlist all the beneficiaries you wish to give your possessions to.
Certain estate planning documents give you a wider scope when it comes to
including the beneficiaries. For instance, a last will and testament enables
you to include beneficiaries outside your immediate family circle. Some people
may even include friends or colleagues who have played a crucial roll in their
lives. - Estate planning prevents the
treacherous judicial process known as a probate which occurs when the court
gets involved in deciding how your estate should be divided and the validity of
your assets in the first place. This is usually a long and tiring process since
your family or attorney have to provide all the necessary documents as
evidence. Estate planning therefore keeps all your matters in order.
Estate Planning
Documents
Estate planning is a
continuous process which requires various avenues for making the entire journey
easier for you. There are necessary paper works which are normally involved in
estate planning. You may have come across some of them at one point in your
life. Even if you are unfamiliar with these documents, feel free to read about
them below.
Power Of
Attorney
In legal matters, a
power of attorney is a lawful authority that is handed to someone (agent) to
handle any legal matters on behalf of the person (principal). The agent performs
any legal duties given by the principal on effect that the principal has been
rendered incapable through death, a mental illness or old age. However, a power
of attorney is restricted to carry out various tasks. Depending on the state
you live in, the power of attorney cannot alter or create your will without
your consent. It is important to note that there are several types of power of
attorney. Each type serves a different purpose based on the prevailing
circumstance.
In estate planning,
there are two commonly used powers of attorney; the financial power of attorney
and the healthcare power of attorney.
Financial Power
Of Attorney
This legal document
gives an agent the right to oversee your finances. You can nominate an
individual or an institution such as a bank to have the financial power of
attorney. Each state in the United States has an official financial power of
attorney.
As such, your power of
attorney should be customized around the laws of that particular state you have
obtained it from. This document can either come as a durable financial power of
attorney or springing financial power of attorney. The durable one simply means
that once the two parties append their signatures on the document, it
immediately becomes effective.
The agent is now able to
oversee your financial matters even if you are still mentally capable. This may
occur in instances where you are out of the country or your spouse is also
unavailable. On the other hand, the springing financial power of attorney only
comes into effect after the occurrence of an unfortunate event that renders you
incapable.
An agent can oversee
financial issues such as: transacting with your financial institution;
collecting revenue from your business; verifying your tax payments; collecting
any debts owed to you; opening of accounts; following up on any state benefits
like social security and ensuring that payments on mortgage, car or property is
paid on time.
Healthcare
Power Of Attorney
As we have seen above, a
power of attorney is necessary due to an uncertain future. Incapacitation may
occur as a result of medical causes. Common cases include mental illness,
debilitating diseases such as Alhziemer’s or dementia or a permanent brain injury.
Such ailments can render
you mentally incompetent to make any sound decisions regarding your estate
division. A healthcare power of attorney comes in handy in case of such events.
This document is effective as it allows the principal’s wishes to be carried
out. It gives guidelines on how you would want your medical concerns to be
handled. Maybe you do not desire a dialysis or physiotherapy and instead wish
to be allowed to die. This information is normally indicated on the healthcare
power of attorney.
This document also
indicates any consent you give. You may give, withdraw or refuse consent on a
particular medical regimen you are undertaking.
Importance Of
Having A Power Of Attorney
- It is crucial in curbing conflicts
arising from heirs who contest the asset distribution. It is normal for the
heirs to feel that assets were unfairly distributed and may seek to contest in
court. A power of attorney will come in handy during such instances. - A power of attorney is useful for
following up on certain benefits, such as the state’s social security fund or
retirement benefits if you need assistance due to old age. - It reveals the extent of estate or
asset ownership. This is useful in taxation planning, as it ensures that there
is no tax evasion on your part.
Trusts
Trusts serve as a
crucial aspect of estate planning. A trust is best described as an association
formed by a trustor or someone who entrusts their assets to a second party
called a trustee to manage them. The trustee is given legal rights to the
assets in play. This is done while the trustor is still alive.
A trust can either be
revocable or irrevocable. In a revocable trust, you as the grantor still has
full control to your property. You can freely amend any component in it. On the
other hand, the irrevocable trust grants the trustee all privileges of managing
the assets. Incase an amendment is necessary, all involved parties have to
agree first.
There are specific rules
outlined in a trust document which must be followed by the trustee. Choosing an
administrator can be daunting as you need to ensure that your trustee has your
best interests while serving you. As such, as a grantor or trustor, you have
the right to terminate the services of your administrator if they break the
rules or have a conflict of interest.
A trust is a crucial
document in estate planning as it can save the entire family the exhausting
judicial process of seeking to establish whether the deceased had divided their
estate before their demise.
Importance Of
Having A Trust
- A trust ensures that there is
asset guardianship. Even while still alive, you may encounter financial
setbacks that may place your assets at risk of being seized by debt collectors.
Having a trust can prevent such measures because your trustee can offset any
financial predicament. - Trusts serve families in asset
division. Any complex procedure involving how you may want to distribute your
assets can all be outlined in a trust. - A trust is used to prevent forced
heirship. This is where assets are distributed as per the grantor’s cultural
traditions to immediate family members which can put other beneficiaries
outside the bracket. As such, a trust provides a wider scope of beneficiaries
which minimizes conflicts among beneficiaries. - A trust ensures that all assets
are preserved and protected. You may not wish to distribute each and every
asset to your beneficiaries, but instead decide to leave some assets for future
generations. A trust is useful in such a case. - A trust is also useful as it
ensures that your family name is preserved. You may be running a business and
desire to see it progress even after you are long gone. A trust will establish
certain parameters which will protect your family name in the business world.
Last Will And
Testament
As someone who has
worked hard to secure a decent lifestyle over the course of your life, it is
only fair to ensure that upon your demise, any form of asset you had acquired
is left to keep your legacy alive.
Writing a will
guarantees just that. Drafting a will is not rocket science as most of us
believe. With the aid of simple guidelines, you can easily draft one on your
own without having to hire an attorney.
A written last will and
testament gives a clear overview of all your estate, assets or liabilities. It
describes who should receive which asset. It also lists all your beneficiaries,
from children, friends, charities and relatives.
One does not need to
wait until old age sets in to draft one. It is advisable to always have one at
hand. Even after accumulating more wealth later on in life, you can still make
amendments to the original will.
Failure to write a will
while you are alive leaves your beneficiaries at the mercy of the laws
governing your country which will decide how to distribute your estate upon
your death. This is known as dying intestate.
While writing a last
will and testament, consider the following:
- Enlist all the beneficiaries you
have in mind. This is dispel any possible future conflicts. - Assign an executor who will
oversee the management of your assets. The executor will also be there to read
out your will to the beneficiaries when the time comes. In addition to having a
main executor, it is important to have a back-up plan by appointing an alternative
executor. This comes in handy in instances where the main executor is unable to
carry out their duties. - Have a few witnesses who will
confirm the contents of your will. Incase of any conflicts, such witnesses may
be called to verify the validity of the will.
Importance Of
Having A Last Will And Testament
- As we have already seen, having a
last will and testament prevents you from being at the mercy of the state who
are mandated to distribute your assets in case you die intestate. - A last will and testament enables
you to include other beneficiaries such as illegitimate children who may not
have much authority in your family matters. Including them ensures that they
have a right to your estate like others.
The above listed
documents play a vital roll in all your estate planning procedures. It is
advisable to contact a legal expert or you can ask for assistance in any issue
you may not understand. No one has to die intestate as this is a recipe for
conflicts and mess among thee loved ones involved.
Estate Planning Attorney Free Consultation
When you need your estate plan completed or updated, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
Recent Posts
Should I Get A Divorce Or An Annulment?
Is Mediation The Best Route In Divorce?
No comments:
Post a Comment