Estate planning is a method for preparing yourself and your family for what happens after your death. Estate planning also allows you to plan for unexpected incapacity. Planning ahead gives you a chance to specify who will inherit your property after your death while helping you to reduce the taxes your estate must pay. If you become temporarily or permanently incapacitated, your estate plan can provide the protection you and your family will need.
No, estate planning is not only necessary for the wealthy. Estate planning can protect anyone who has anything they want to leave behind for their loved ones. Even the smallest estate needs to be planned to protect both the assets themselves and the beneficiaries to which they will be passed. In fact, most middle-class families need a plan just in case a family’s breadwinners are no longer able to provide.
If you don’t make the decision now about who should receive your estate property, the court will make those decisions for you. The basic purpose of an estate plan is to select which of your heirs should receive which property. If the court is required to do this for you, it can take years to complete and often leads to ugly family disputes. Also, courts do not automatically decide that a surviving spouse will get everything.
To ensure that your children will be taken care of, in the way you see fit, you need to designate a guardian or guardians to care for them, in the event both parents die before the children turn 18. Otherwise, the court will make that decision for you.
If you want to be sure that your heirs will not pay more than they absolutely must pay in estate taxes, then you need to have an estate plan. Estate planning can help you protect your heirs from a huge tax burden, by allowing you to transfer your assets to your heirs while maintaining the smallest tax burden possible. Estate planning can help you take advantage of the right exemptions and deductions.
By leaving very specific instructions in your estate plan, you can avoid family disputes over money and heirlooms. Ultimately, you don’t want to see your family fighting over your personal possessions after your death. An estate plan you can help you to avoid many of the challenges that come with distributing an estate.
To create a will, you must first be old enough. The age of majority is different in each state. In California, you must be at least 18 years old. In most states, it is presumed that the testator has the necessary mental capacity to make a will unless someone challenges that capacity. If that happens, the court will determine whether the person who created the will was incapacitated at the time. In California, you are considered mentally competent to sign a will if you understand the nature and extent of your property, meaning you know what you own and how much you own; you can remember and understand who your relatives and descendants are and can articulate who should inherit your property; you understand what a will is and how it disposes of property; and you understand how all these things relate to each other and come together to form a plan.
There are a few risks in using a do-it-yourself will, most commonly, not getting the document witnessed properly, in compliance with the legal requirements in their state. Most states require two witness signatures for a will to be valid. Another problem clients often have is that names were misspelled or notations on the will were unclear, which requires intervention by the court. Some of the mistakes that are typically seen with a do it yourself will can lead to serious legal issues that cannot always be corrected quickly.
NO. A Living Trust can help anyone protect his or her family from unnecessary probate fees, attorney’s fees, court costs and state and federal estate taxes. In certain circumstances even individuals with small estates can derive meaningful benefits.