Estate planning is a relatively new area of law that focuses on elder law and protecting their assets. This area of law is often misconstrued, especially as most people relate “estate” to real estate properties, hence a common misinterpretation.
A top-rated Estate Planning Lawyer in Franklin TN has shed more light on this practice area and why everyone needs to pay attention.
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What is Estate Planning?
Estate planning is a branch of law that focuses on planning everything an individual or family owns, from their homes to other properties like cars, investments, businesses, bank accounts, life insurance, and more.
This area of law focuses on catering to the individual and their family’s long-term and future needs, dictating how their assets are administered or managed when they become sick, incapacitated, or dead.
Estate planning has become an important part of families, especially as it lays the template for transferring assets and wealth from one generation to the other.
What’s the Purpose of an Estate Plan?
Estate plans have become important because they define how assets are managed, administered, divided, and transferred. Failing to put an estate plan in motion can lead to probate issues, a problem that can starve legitimate beneficiaries of access to their deceased loved one’s assets and estate for years.
Besides the seamless transfer of assets and wealth, estate planning helps individuals and families choose who benefits from their wealth when they benefit from it, and to what extent. This means that loved ones can lock their assets until the desired persons attain certain stages or developmental milestones.
An estate plan also caters to the estate owner, especially when they become incapacitated, sick, or unable to make decisions. It ensures that the right person assumes authority over the distribution and management of their estate while they are incapable.
What are the Common Estate Plans?
Planning your estate is an important step to take. It is more important to note that anyone can plan their estate, irrespective of their current or future financial or family trajectory.
In planning your estate, you will need to work closely with an experienced estate planning attorney who will guide you through the available estate planning instruments that can be adopted to protect yourself and your loved ones.
The common estate planning instruments include;
Last Will and Testament: This is a document that allows the client or estate owner to distribute their possessions however they deem fit to named persons or entities. It is a sealed legal fulfillment of the estate owner’s wishes and will only be made public or to the named beneficiaries upon their demise.
Living Wills: This is a legal document that is used to define a client or estate owner’s wishes for themselves or in situations when they become sick, incapacitated, or unable to make decisions. The will, for example, can define how the estate owner wishes to be cared for, if they want to be resuscitated, or how long they wish to stay on life support.
Trusts: Trusts are available in different categories and allow the client to enter agreements that hold a part or all of their assets in place for another named party’s (the beneficiary) benefits. Trusts can be created to support a named party’s education or future ambitions. They can also be created with strict rules on when they are unlocked, how much can be accessed, etc.
Financial Power of Attorney: This legal document empowers another person (named by the estate owner) to administer financial decisions over the estate.
Medical Power of Attorney: This is also known as healthcare proxy and defines who makes important health decisions when the estate owner becomes incapacitated
Why is Estate Planning Important for Everyone?
Estate planning has become important for individuals and families for many reasons, including;
Saves Time and Money
With an estate plan in place, families and loved ones can save time and money by avoiding the lengthy and expensive probate process. They can also quickly access their deceased loved one’s estate instead of tussling and haggling over who gets what share of the deceased’s assets.
Helps Avoid Huge Taxes
A solid estate plan can help families and beneficiaries avoid taxes on inheritance. This means that beneficiaries may be able to get more out of their inheritance when it is funneled through the appropriate estate planning vehicle.
This approach can help estate owners to better protect their loved ones while also protecting their hard-earned wealth from being sapped away by the government.
Estate Plans Protect Children and Vulnerable Family Members
Children and vulnerable family members are the most impacted when a loved one dies. They are often cut off from the deceased’s estate, especially when older family members grab the wealth for themselves. However, an estate plan can carefully apportion the deceased’s estate to each beneficiary, ensuring they get what’s due to them.
