subject: Why Entering into Estate Planning is Essential [print this page] Why Entering into Estate Planning is Essential
Estate planning involves establishing strategies to protect inheritance property, establish guardianship, designate an estate administrator for probate estates, establish trusts, provide healthcare directives, and grant power of attorney rights.
The type of estate planning required depends on estate assets. Small estates valued below $50,000 may or may not have to pass through probate. Much depends on the types of assets involved, as well as state probate laws.
A last will and testament is required for both probate estates and estates protected by a trust. The Will is an important legal document that can be used to provide directives about many aspects of estate settlement. In addition to naming heirs and beneficiaries to receive inheritance property, the Will is used to name guardians for minor children.
When individuals want to disinherit family members, they can include a disinheritance clause in their Will. This is particularly important for estates which are required to pass through probate. Heirs have the right to contest decedents' Wills if they feel they were entitled to property that was not gifted to them. Including a disinheritance clause can lessen the risk of having the Will contested.
Contesting a probated Will extends the probate process for several months. A prime example of how long estates can be suspended in probate is the estate of J. Howard Marshall, deceased husband of Anna Nicole Smith. Although Marshall died in 1995, estate administrators are still embroiled in legal battles over rightful heirs.
While most people will not endure having their estate suspended in probate for decades, the process can eventually bankrupt estates. Engaging in estate planning measures can help minimize the potential for lawsuits and family feuds.
At minimum, estates should be protected by a last will and testament. Individuals with estates valued over $100,000 should consider protecting their estate using a trust. Assets placed inside a trust are exempt from probate and inheritance distribution occurs rather quickly. Individuals should also establish healthcare proxies and designate power of attorney rights.
There are several ways to execute a last Will. Individuals with few valuable possessions can have a basic Will executed by a lawyer for a minimal fee. Companies such as LegalZoom provide preformatted Wills which allow individuals to fill in the blanks. Preformatted Wills can also be downloaded via the Internet or purchased at office supply stores.
To draft a Will, individuals should create a list of personal property, financial investments, real estate holdings, business assets, and titled property such as automobiles, boats, or RVs. Assets can be gifted to anyone. Most people leave inheritance to their spouse, children, or family members, but property can also be gifted to friends, charitable organizations, and schools or colleges.
Power of attorney grants authority to another person to make decisions based on your behalf. The person granted with POA rights should be trustworthy and capable of making difficult decisions. Individuals with POA can access bank accounts and sell valuable property including real estate. Therefore, deciding who to empower with these rights should not be taken lightly.
A healthcare proxy is a crucial element of estate planning as it provides directives as to the time of medical care you do or do not want to receive. Healthcare proxies put your wishes in writing and state whether you want to receive life support or be resuscitated. People often issue do not resuscitate orders when they are terminally ill.
People oftentimes think estate planning is reserved for the wealthy, but this is not the case. Everyone owns something of value which they would like to pass along to another person. If inheritance is not gifted through a Will, property is distributed according to state probate laws and may not end up where you intended it to go.
