• SearchField_GetLegal

The Fundamentals of Estate Planning

Taking the Right Steps to Protect Your Estate and Your Loved Ones

Estate PlanningWhen 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.

What Is Estate Planning?

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:

  • Legal documents, such wills, trusts, powers of attorney, and advance medical directives
  • Retitling of property to allow assets to pass automatically at your death
  • Lifetime gifts

Purpose or Function of an Estate Plan

An estate plan serves several purposes:

  • It provides the creator with control over the disposition of property, the designation of guardianship, and the appointment of persons to make decisions on their behalf.
  • It minimizes the risk of estate contests or litigation, which can be expensive and time-consuming.

It reduces the potential stress and anxiety for survivors or other family members, who don’t have to guess what the decedent wished.

An Overview of Estate Planning

The estate planning process requires that your attorney gather extensive information about

  • your finances, including assets, debts, retirement plans, and business interests;
  • how you want your property divided upon your death, including any specific bequests of property; and
  • whether you have minor children or other dependents who will need a guardian in the event of your death.

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.

What Are the Basic Components of an Estate Plan?

An effective estate plan provides instruction for:

  • The allocation of property on death—This is typically accomplished with a will or trust.
  • The guardianship of minors or other dependents upon death—The language of your will should address any needs for the appointment of a guardian.
  • The appointment of a person to act on your behalf if you are unable to do so—This requires that you execute a power of attorney.
  • Instructions for the medical care you want to receive if you cannot make your own decisions—There are two kinds of advance directive documents that address medical decisions and medical care—living wills and medical powers of attorney. A medical power of attorney identifies a specific person to make medical decisions for you (if you cannot), whereas a living will allows you to identify the types of treatment you do or do not want (such as artificial life support).

How Estate Planning Works in the United States

In the United States, estate planning is governed almost exclusively by state law. An estate plan customarily includes:

  • A strategy for the orderly transfer of assets in anticipation or on death, either through a will or trust, the conveyance of property before death, or the retitling of assets in joint ownership, allowing for the automatic transfer of the property to remaining joint owners on death;
  • Directions regarding who will serve as guardian for any minors or incapacitated adults;
  • A document appointing an agent to have power of attorney, with a statement of the circumstances in which the power of attorney may be exercised; and
  • Appointment of a person to make medical decisions under a medical power of attorney/advance medical directive

Consequences of Failing to Prepare an Estate Plan

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 and Tax Consequences

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.

Connect with Top-rated Attorneys Near You

    Latest Article

      GETLEGAL®ATTORNEY DIRECTORY

      Find Leading Attorneys in Your Area

          NEED PROFESSIONAL HELP?

          Talk to an Attorney

          How It Works

          • Briefly tell us about your case
          • Provide your contact information
          • Choose attorneys to contact you
          • SearchField_GetLegal

          ABOUT GETLEGAL

          Our mission at GetLegal is to develop a family of sites that constitute the most useful, informative, reliable and exciting collection of legal resources on the web. We are constantly working to expand and improve many resources we offer to legal professionals and the public.

          Contact Us : (817) 359-7077

          RECENT TWEETS

          NEWSLETTER SIGN-UP

          By submitting information to this site, you give permission to GetLegal, or a partner of GetLegal, to contact you by email.

          Advertise With Us

          © 2008-2022 LawConnect, Inc. All rights reserved. Sitemap | Copyright/DMCA Policy | Privacy Policy | Terms of Use | Disclosures/Disclaimers