Why Should You Consider Estate Planning
November 17, 2023
Many times people underestimate the amount of assets they own due to the underlying belief that significant assets are only owned by the wealthy. In reality, most individuals own a few different assets with the common ones being a home, cars, real property and bank accounts.
What Is Estate Planning?
Estate planning is the process of arranging for the management of an individual’s assets in the event of their death. This process involves creating a comprehensive plan with legal and financial arrangements that will allow for the proper distribution of an individual’s assets and affairs in a timely manner following their death. The main purpose behind this process is so that in the case of an individual’s death, they would still be able to provide for their loved ones, maintain some control over their financials as well as protect their assets they have worked hard to attain.
Some of the key elements utilized in the estate planning process include the creation of a will, trust, power of attorney, and letter of intent.
A will is a legal document that has an individual’s wishes, regarding their distribution of assets and care for the dependents, outlined in the event of their death. The purpose of a will is to ensure that the person that has passed has legal dictation that ensures that their assets/properties will be passed on and distributed in the way they had hoped for. By not planning ahead and creating a will, individual’s face the risk of having the state jurisdiction dictate how their assets will eventually end up distributed.
A trust is a legal entity that is established by a grantor/settler who transfers assets into the trust that are eventually meant to be distributed to one or more beneficiaries. The assets in the trust are managed by a trustee who oversees the trust until control is given to a beneficiary, according to the terms and conditions laid out in the trust document. The main purpose behind creating a trust is to have an extra layer of control over your wealth by being able to set a time period and conditions for when and how your beneficiary would be able to gain the assets, and the other reason is that by having this entity many taxes and court fees can be avoided due to the fact that assets are passed on privately without any probate (matter of public record).
Power of Attorney:
The power of attorney (POA) is a legal document that grants one person authority (an agent) to act on behalf of another individual (also known as the principal), in the case of their absence or death, in regards to their legal and financial matters. This document outlines the specific powers and actions that the agent can take on behalf of the principal.
Letter of Intent:
A letter of intent is an informal supplement to a will or trust that is utilized to provide additional details of asset management as well as funereal proceedings that were not included in the will or the trust. This letter also clearly indicates to the executor of the estate how the proceedings should be conducted moving forward.
Why Should You Consider Estate Planning?
The main benefits that estate planning provides is that it ensures that your assets are protected and are distributed according to your specific intentions and will. Having a plan ahead of time that clearly outlines how assets will be managed also reduces the risk of legal and financial complications as well as family disputes over guardianship or inheritance. Another reason to consider estate planning is due to the fact that if a will/trust or some type of legal plan is not curated in regards to your assets and an unexpected death ends up occurring, the assets will be subject to the laws of the state. In these cases, the assets could be tied up in court for years due to probate delays or intestacy laws (set of legal rules to determine how assets should be distributed without a will).
Estate planning is an essential step that everyone should be partaking in regardless of their age, income level or specific circumstances. If you would like to safeguard your loved ones’ future as well as maintain a level of control over how your assets are managed and allocated, estate planning is definitely something to take into serious consideration.
At Ball Eggleston, our team of experienced lawyers are here to guide you through the estate planning process as well as answer any questions you may have. Let us help you secure your future and your family’s well-being.