Putting together an Estate Plan
Many people are concerned about what will happen to their assets and wealth once they pass away.Most people wish to control where that wealth goes.Some people leave everything to a spouse or their children, while others may wish to leave everything to their favorite charitable organization.Others wish to protect their pets that may survive them.Here is an overview of different estate planning options to consider when putting together an estate plan.
Trusts offer more options for a person to pass along their wealth and assets.They provide for avoiding paying as much tax, giving only a certain amount to children until they reach a certain age, allow for modification in the future depending on the circumstances of the family, and often avoid costly probate proceedings.A trust may be created while the person is still alive or may be created through a will.Often, people will have both a Will and a trust.The Will will send all of the left-over assets not devised in the Will to the trust.Trusts can be used in a variety of ways, and many estate planners can help avoid most estate taxes by creatively writing a trust.
People should always consider giving away as much property and money as they can while they are still alive.For example, a person is allowed to give away a certain amount of money to another person without the transfer being taxed.They may do this each year.This provides a way for people to minimize the amount of wealth that will be transferred in a will and be subject to estate taxes.Birthdays, holidays, and graduations are a good opportunity to give money away.Not to mention, the person giving the money will be able to see their loved ones enjoy the gifts.
Another method for avoiding costly and time consuming probate proceedings is to make certain assets pass by contract.For example, if the person were to put their spouse, child, or friend as a joint tenant of their home, car, or bank account.When the person dies, the asset will automatically transfer to the previously contracted joint tenant.There are no taxes or probate costs.Also, especially with retirement accounts and life insurance policies, a person may elect who the beneficiary of the plan will be.Often, they are able to elect multiple beneficiaries.These plans will automatically pass the assets to the beneficiary at the death of the decedent.No probate procedure is necessary.
Simply stated, it is important to create some sort of valid estate plan to avoid having wealth and assets pass by intestate succession.Each state has a statutory method for distributing assets that have not been passed through an estate plan.When assets pass according to the statute, it is called intestate succession.While the statute may send assets to family the way a person wants, it is always better to have an estate plan.