Estate Planning
Estate planning is the process of planning for the disposition and management of your assets if you become seriously ill or die. It includes such items as wills, trusts, choosing guardians for minor children, designating beneficiaries, and an executor who will have power of attorney. Estate planning is typically carried out with the assistance of an attorney specializing in estate planning.Goals of Estate Planning
Some of the goals of estate planning include legally minimizing the amount of taxes paid on your estate in order to maximize the monies available for beneficiaries; ensuring that your assets are transferred to the beneficiaries of your choice; and making sure your estate plan is in legal and financial order to avoid lengthy disputes in probate court. Additionally, a plan should be in place to establish long-term care and financial planning for children and yourself in the event of illness.
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Planning Your Estate
In all matters of estate planning, it is wise to consult an attorney so as to prevent any irrevocable errors from occurring.
The next most important consideration in estate planning is designating an executor to manage your estate. The estate includes property you own, such as bank accounts, investments, IRAs, and other qualified retirement plans, houses, furniture, cars, boats, jewelry, etc.
The next step is to determine the value of the estate. The value of the estate equates to the cash value of your assets, such as IRAs, investments, and bank accounts plus the fair market value of property, from cars to houses, jewelry, and furniture. Once the total value is determined, debt such as mortgages or car loans is subtracted to arrive at the final value of the estate.
The value of the estate is a key factor in whether estate taxes will or will not be due upon your death, and will help you choose the best method of estate planning for your situation. If estate taxes are likely to be due, it is in your best interest to consult with a tax attorney as well. Probate court can usually be avoided if your estate is less than a certain value specified under the law.
Probate Court
When no estate plan is in place, and there are considerable or even minor assets in question, the money that would go to beneficiaries will potentially be tied up in legal fees and the court system, specifically probate court. Probate court is used to resolve disputes surrounding your estate, including property and monetary distributions to heirs and other beneficiaries (for example charities), and to pay off creditors.
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