What is estate planning?
An estate plan concerns an individual’s estate, which is all of the property owned by an individual, or any property in which an individual has an interest. An estate plan concerns the management of an individual’s estate during life while disabled, and the distribution of the estate at death.
What are the different types of estate planning tools?
Last Will and Testament
- A Will is a document that distributes probate assets to heirs upon death. “Probate” is a court proceeding in which a judge determines the validity of a Will, a personal representative collects the decedent’s assets and pays the bills, and then distributes property to heirs.
- Wills are useful in distributing property to heirs. If you do not have an estate plan, your estate will likely pass according to state law.
- Wills are also useful in appointing someone to act as personal representative, the person who is in charge of the estate.
- A Will is also useful to name guardians for minor children. A guardian cares for your children in the event you are deceased.
For more information about Trusts, see our Trust section.
- A gift is the transfer of property to another without receiving any compensation.
- Federal gift tax is imposed on gifts of a certain amount.
- At present, you can give away up to $13,000.00 to any person, or number of persons, without tax.
- Gifted property is removed from the estate of the donor.
Powers of Attorney
- What is a power of attorney?
- A power of attorney is a document that allows another person or institution to make decisions for you in the event that you are incapacitated.
- Why do people adopt a power of attorney?
- A power of attorney allows someone to collect income, pay bills and manage assets when you are unable to do so yourself.
- Some powers of attorney allow other people to make healthcare decisions for you in the event you are incapacitated.
Why do people adopt an estate plan?
- An estate plan allows you to minimize estate and inheritance taxes.
- An estate plan will help you reduce administrative or other transfer costs.
- Estate planning allows you to distribute property to your heirs.