Estate planning involves determining how a person's assets will be preserved, managed, and distributed after death. It also takes into account the management of a person's assets and financial obligations in the event that they become incapacitated. Estate planning is the process of designating who will receive your assets in the event of death or disability. Often done with the guidance of an attorney, one of the objectives is to ensure that heirs and beneficiaries receive assets in a way that manages and minimizes wealth taxes, gift taxes and other fiscal impacts.
Estate planning involves establishing a plan that establishes who will eventually receive your assets. It also makes known how you want your affairs to be handled in case you can't handle them on your own for any reason. It's a complicated process and can definitely be overwhelming. Estate planning has a lot of components, and while there's a common misconception that it's just about your finances, the truth is that there's much more.
A will provides its instructions, but does not prevent the legalization of inheritances. A will only indicates how the assets titled in your name will be distributed without the designation of a beneficiary or other government contract. The assets must still go through your state's probate court before they can be distributed to their intended beneficiaries. If you own a property, usually real estate in other states, several successions may be required, each in accordance with the laws of that state.
It can also take anywhere from a few months to two years or more. With some exceptions, inheritance proceedings are open to the public and your creditors and excluded heirs receive notification of their opportunity to request payment of a debt or a portion of their estate. In short, the judicial system, not your family, controls the process and schedule of distributions to your beneficiaries. These concerns prompted the Real Estate Trust Section of the United States Bar Association (the “Section”) to appoint this Working Group to evaluate the use of DIY methods in estate planning.
The Working Group has considered a number of issues, including the reasons why DIY options may be inadequate or incomplete for many people. The Working Group is reviewing much of the comments on DIY estate planning and will publish a more detailed report in the future. This preliminary comment identifies some of the many concerns identified by the Working Group. The Working Group looks forward to further studying the role of DIY estate planning.
While he has identified a number of problems, he recognizes that some people, mainly motivated by cost issues, will make their own wills. The working group anticipates that, in certain situations involving the alienation of modest assets between close family members, the DIY plan can work effectively. However, the Working Group perceives many other situations in which a person may have a false sense of security that they have addressed the disposition of their estate, only to discover (after death) that important issues were not addressed. This could lead to greater difficulties and expenses in the administration of the estate, with the prospect of a dispute between the intended objectives of the provisions of the deceased.
For those reasons, the Working Group concludes, at least in a preliminary review, that the average person should proceed with caution when using DIY estate planning as a substitute for an appropriate, professionally drafted plan. It used to be that properly preparing the types of documents contained in an estate plan could cost you thousands of dollars. Estate planning means planning what happens to all your assets when you die and what happens to you if you become incapacitated. While most people think that CPAs only help provide advice to individuals, businesses, and corporations, a CPA can also provide valuable wealth planning advice.
Naming a beneficiary for bank accounts and retirement plans automatically makes the account payable when the beneficiary dies and allows the funds to skip the legalization process. If an estate consists of substantial assets and the owner wants to donate to charity, there are several ways to incorporate those philanthropic goals into an estate plan. However, a fundamental component of estate planning includes documentation in the event that you become incapacitated. You can get an affordable, legal, effective and valid estate plan that ensures that your wishes will be known should the time come when they are needed.
If you have young children or own a home, or may have significant debts or estate taxes when you die, life insurance may be a good idea. For example, if children are not old or mature enough to manage a significant inheritance, an estate plan can address this problem by making provisions through a trust. For these reasons, the Working Group is developing resources for those who are considering their estate planning options. That's estate planning, making a plan ahead of time, naming the people or organizations you want to receive the things you own after your death, and taking steps now to make executing your plan as easy as possible in the future.
People put off estate planning because they think they're not old enough, that it will be expensive or confusing, that they'll have plenty of time to do it later, they don't know where to start or who can help them, or they just don't want to think about it. Yes, there are a lot of steps needed to create a complete estate plan, but we've made it as easy as possible by listing each of them. . .