What Is Estate Planning?
Estate Planning is a blueprint and legal structure for the accumulation, protection, and distribution of assets during one’s life and upon death. Put simply, an estate plan helps you ensure that you will have a say over what happens to your property and assets after you die, and gives you the security of knowing your loved ones will be provided for and will not be burdened unnecessarily after your death. The right estate plan will also allow you to pass on your assets without the interference of estate taxes or probate, both of which can deplete your estate considerably (if not entirely).
In addition, estate plans allow you to plan for situations in which you may be alive but unable to state your own wishes or make sound decisions, like suffering from dementia or falling into a coma. Estate planning allows you to clarify your legally enforceable wishes for things like life-prolonging medical measures (i.e., when, and when not, to use life support), and to appoint trusted proxies to make decisions on your behalf if you are unable to do so for yourself.
Various legal structures can be used to plan an estate. These include, but are not limited to:
- Joint Accounts
- Beneficiary Designations
- Healthcare Directives
- Powers of Attorney
What Does It Mean To Fund An Estate Plan?
Many times, estate plans are designed but never fully implemented or properly funded. Funding is the process of moving and titling assets into the legal structures of your plan. For example, if you intend to use a trust to protect a real estate property, such as a house, “funding” the estate plan would mean actually deeding the house to the trust in order to protect it. If the house is never properly deeded into the trust, then the plan is not funded, and the trust has no practical benefit. It is very important to make sure that you carry through all estate plans through to completion.
Isn’t Estate Planning Just For Rich People? Do You Have To Have A Certain Amount Of Money Or Certain Types Of Property To Need An Estate Plan?
No! It is a common misconception that estate plans are exclusively for wealthy people, or that wealthy people are the only ones who have to be concerned about making these sorts of plans for the future.
Any person over the age of 18 who wants a say in what happens to their property and assets after they die, or who wants to ensure things are as easy as possible on their loved ones after they die, should have an estate plan. It doesn’t matter how much—or how little—you own.
Estate plans are also necessary in order to plan for serious medical decisions (like when to use life support), and in order to appoint someone to make medical and/or financial decisions on your behalf if that is ever needed. In addition, if you have children or are the guardian of minors or disabled adults, an estate plan is absolutely necessary in order to appoint a guardian to care for them if you die or are incapacitated and unable to do so.
What Is A Living Trust?
A living trust is an estate planning tool that gives you the ability to transfer your assets and property into a separate legal structure (a trust). When setting up a living trust, you give a trusted person (a “trustee”) the responsibility of managing your assets and property within the trust, for the benefit of the people who will eventually inherit them (your “beneficiaries”).
There are many benefits to setting up a living trust. Two of the biggest benefits are that:
- Living trusts are designed to let you avoid complex and expensive processes like probate, as well as (in many cases) estate taxes, and
- Living trusts can be made revocable, meaning that you can change your trustee or beneficiaries, or even close the trust entirely, while you are still alive.
Living trusts also have many other benefits, including:
- Preserving privacy at death
- Protecting assets from lawsuits
- Avoiding problems of joint ownership
- Protecting assets for disabled children without making them ineligible for benefits
- Directing inheritance in blended and complex families
- Avoiding guardianship in case of incapacity
- Preserves your assets while allowing you to qualify for government benefits in case of long-term care
For more information on Living Trusts and Estate Planning in Arkansas, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (501) 550-1114 today.
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