When you’ve worked hard to create a legacy for your family, you want to take the appropriate measures to make sure your assets go where you want. You also want your estate distributed in a way that won’t cause undue stress or anxiety to your loved ones, and you want to ensure that any minor children or others get the special care they need. Those are the functions of a well-crafted estate plan.
The primary objective of estate planning is to allow you to determine the division of your estate, as well as the guardianship of minor children, and to provide specific directions to accomplish those wishes in the event of your death or incapacity. Estate planning involves the use of a variety of tools to meet those goals, including:
An estate plan serves several purposes:
It reduces the potential stress and anxiety for survivors or other family members, who don’t have to guess what the decedent wished.
The estate planning process requires that your attorney gather extensive information about
Once all information is gathered, you’ll look at the options for accomplishing your objectives, including the use of wills or trusts, lifetime giving, or joint ownership of assets. Your lawyer will then draft and execute the necessary documents to put your estate plan in place or help you take the necessary steps to retitle property or make lifetime gifts.
An effective estate plan provides instruction for:
In the United States, estate planning is governed almost exclusively by state law. An estate plan customarily includes:
If you don’t have a valid estate plan in place, your property will be divided according to the laws of intestacy in your state. Those laws may coincide with your wishes to some extent but may lead to the distribution of your property to persons you would not choose. Furthermore, if there are minor children or others who need guardianship after your death, you won’t have any control over who the appointed guardians will be—the court will make those decisions.
Estate planning can help you manage different potential tax consequences related to your estate: inheritance taxes, gift taxes, estate taxes, generation-skipping taxes, and income taxes. For example, if you create a trust and transfer property to the trust, it won’t be in your estate at the time of your death and won’t be subject to estate taxation.
There are many specific strategies that you can use to reduce the potential tax consequences to your estate. Your best option—retain an experienced estate planning attorney to help you determine the most effective approach for your situation.
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