Estate planning is the process by which an estate is coordinated, prepared, and managed after one’s death. It includes making appropriate legal designations regarding the distribution of assets.
Estate planning may also include strategies to reduce taxes, ensure liquidity and protect against potential beneficiaries, creditors, and beneficiaries from claims against the property during probate proceedings.
Estate planning is vital for the well-being of loved ones dependent upon an independent living trust, including spouses and children.
The Main Goals of Estate Planning Typically Include the Following
1. Minimizing Taxes
Taxes are among the most important things to consider when creating an estate plan. Most states have statutes that require probate courts to distribute assets in a certain order according to their value at the time of death.
This can cause problems if there is more than one beneficiary because it allows one person to receive more money than another on the same account at the same time or even at different times. To avoid this issue, use a trust or other irrevocable arrangement to ensure that each beneficiary receives equal shares of your assets upon your death.
2. Probate Avoidance
Probate avoidance is the most significant objective of estate planning. Probate is a legal process determining who owns the property and how it will be distributed among beneficiaries.
Probate can be expensive, time-consuming, and emotionally draining for everyone involved. It requires the court to appoint an attorney to handle the probate filing process and file a legal notice in newspapers nationwide.
This often takes months or even years to complete, which can seriously burden families already struggling financially. Probate avoidance can reduce these costs by allowing you to transfer property directly from one party to another without going through probate court.
3. Protecting Beneficiaries
The main objective of estate planning is to ensure that the spouse, domestic partner, children, and grandchildren are provided for when the decedent dies. This includes protecting them from being left financially vulnerable by ensuring they have enough wealth to meet their needs.
Additionally, it is crucial to ensure that there is enough money left behind so that they can continue living comfortably without worrying about how they will pay their debts or bills.
Also, certain assets, such as insurance policies, should be transferred into the names of beneficiaries so that they can be used for their benefit upon your death.
4. Minimizing Family Dispute
By allocating assets among family members who are not married to each other, you can prevent disputes over what should be done with these assets after you die.
For example, if an unmarried son has been provided with a college fund through his father’s will, there may be disagreement between him and his siblings over whether he should continue receiving this money or whether they should use it instead for his education.
By having an attorney draw up a will that includes provisions for how such funds should be distributed after you die, this problem can be avoided at least until such time as one of the parties dies without leaving behind any written instructions about how this matter should proceed.
Estate planning is an integral part of any wealth management strategy, but it’s not as challenging or unreasonable a process as some might imagine.
With the right tools and adequate preparation, you can successfully plan to have your financial affairs in order upon your passing and ensure that they are taken care of according to your wishes.