Most people make the mistake of believing that estate planning is only for wealthy individuals. Approximately 55% of Americans do not have any Will for their assets. An estate plan is a must for every individual who has elderly parents, children and assets or savings in their name. Estate planning helps protect your family in the event of a bad case scenario. You must hire an estate planning attorney to plan your Estate.
Below are the five things everyone should be familiar with for the-end-of-life planning. This will help save your loved ones from delays and hardships once you are gone.
1.Probate
Before making your estate plan you must understand the process the courts follow and how you can be affected by Probate. Probate is the term that explains the method that the courts follow for settling the estate of the deceased. The time taken for the distribution of the estate and the related fees for this process varies from state to state. On an average, the probate fees will work out to be approximately 10 percent of the estate value. It may take time for the process to be completed. Keeping in view the expenses and hardships suffered due to probate process, any action to avoid probate or make the process easier is worth examining.
2.A Will
The probate process cannot be avoided by a valid Will, but it simplifies the process as the court and executors will follow the wishes of the deceased and use them as guidelines to distribute the assets. It hastens the process and reduces the cost of probate. The will serves only as a road map. it is better to name the beneficiaries in places in addition to the Will.
3.Beneficiaries of the Financial Assets
You can name the beneficiaries for the financial assets so that the asset holding institution is clear as to whom the assets have to turn over to in the event of your death. This avoids probate. Life insurance or retirement plans are the common examples. Many of the everyday assets have the facility to name bank accounts or brokerage accounts as beneficiaries. These get neglected quite often.
4.Revocable Trust
The problem comes with the assets where the facility to name beneficiaries is not available. Constituting a revocable trust can be the answer with the help of an estate planning attorney.
The person who sets up the trust and the beneficiaries named are called trustees. In the event of the death of the trust-owner, the living trustees retain control over the asset and will help transfer the asset to the name of the living trustee. The trust, in fact, owns the asset and transfer of rights to a trustee can be done smoothly.
5.Power of Attorney
Power of attorney is of two types. The first one is called Financial POA in which the person can choose who will take up the responsibility to handle financial decisions in case the person is physically or mentally incapacitated. If you suffer a serious illness then you can allow one of your loved ones to handle your finances to meet the expenses of the hospital and other incidences. The second type is known as Medical POA which dictates the desires of the physically incapacitated person, their medical preference can be considered while taking the decision.
The matter of death is painful and quite uncertain. It is better to be well prepared for any eventuality and avoid the sufferings of your loved ones if it happens. An estate planning attorney can guide you on creating an estate plan that best suits your individual circumstances.