Estate planning is the act of arranging and anticipating, through the life of a person, for the proper management and disposal of his/her estate in case the concerned person becomes invalid and after death, for the effective treatment and welfare of the affected family members. The planning of estates takes place before death as well as after death. It depends on the wishes of the concerned person, whether the affairs should be planned early or late. A person can appoint a guardian or a legal advisor to plan his/her estate. It is advisable that before selecting anyone for this very important task, you should take the advice of a lawyer specializing in estate planning who can give you sound and reliable advice.
The aim of estate planning includes ensuring the financial security of the heirs or beneficiaries and providing for their education and upbringing. It helps the heirs or beneficiaries to access the remaining assets and funds. During the course of the discussion with an agent or attorney, the aim is to make sure that the wishes of the deceased are carried out. This involves making financial decisions based on what the family members believe to be best for them. The agent or attorney will be responsible to handle all legal proceedings in respect of the estate. Such proceedings may include the probate process, dealing with inheritance taxes, making and executing retirement plans, etc.
This is the most difficult part of estate planning as it involves financial decisions that can change ones life forever. Some of the decisions that have to be made during this time are about the asset protection and wealth control of the surviving spouse or relatives, transfer of some non-family assets to the beneficiaries, the use of some assets for payment of debts and other taxes, the distribution of remaining assets, etc. The planning must begin at the time of the formation of marriage or at the time of the acquisition of minor children. This is also the time when other major decisions have to be made like choice of estate agents and final decisions relating to financial matters like investment in business or real estate.
Another type of estate plan is to protect assets during incapacity. For example, if a person dies and leaves his/her spouse, parents, or children without sufficient money to sustain themselves after the incapacitation, then the surviving spouse or children can make use of the estate plan to provide for their living expenses and care until they get sufficient funds. In this way, the surviving spouse or children are protected from the loss of the deceased’s assets as the result of incapacity. In fact, most states require that the assets of a deceased person who has died without enough money to sustain himself/herself be protected under the right of inheritance in case of incapacity.
One other major objective of estate planning is to ensure a tax benefit for the beneficiaries during their lifetime. While the purpose of saving for retirement or investing for children is ideal, in many cases this is not possible. The tax benefits that could be gained by undertaking good estate planning are therefore significant. Some of the assets that can be protected by proper estate planning include bank accounts, retirement plans, educational funds, life insurance policies, and large estates.
Overall, estate planning is very important for all Americans. The lack of a sound estate planning process leaves families with the burden of paying taxes to the government when the owner of assets passes away without having been properly taken care of.