Estate planning is the act of preparation and management of assets and wealth upon an individual’s death. Assets include life insurance, pensions, real estates, cars, houses, stocks and personal belongings. It is also a means of anticipating and arranging one’s assets during their lifetime and safeguarding a person’s funds in the event of incapacitation.
Estate planning comprises the bequest and bestowal of assets to heirs, and also takes into account any financial obligations and tax settlements. Most estates plans are organized by an estate planning attorney much like the Alexander and Associates law firm in Raleigh, North Carolina. Estates planning is very effective in eliminating the uncertainties involved in probate courts and can help maximize the value of the estate by reducing taxes and other expenses. In the United States, assets left to spouse or charities are not subject to U.S Federal estate tax.
The devices or instruments of estate planning are:-
- Beneficiary Designations
- Powers of Appointments
- Power of Attorney
- Property Ownership
Wills: – A will or testament is a legal document by which an individual expresses his desire regarding the distribution of his assets and funds at the time of his death. Wills are common estate planning instruments, it is important to create and execute a will in accordance with the law. Any person who has attained the age of 18 years can make and execute a will, although state laws may varies.
Trusts: – Trust, also is known as a fiduciary relationship and are set up for the benefit of a third party. Its main purpose is to direct the distribution of assets. It can be used to distribute funds for the benefits of minor children or physically or mentally disabled. In United States, trusts are generally irrevocable unless expressly mentioned as revocable except in the states of Texas, Oklahoma and California.
Beneficiary Designations:-A beneficiary is an individual who inherits the assets under the instructions of a will. A designated beneficiary is usually a spouse or a family member who inherits assets such as life insurances, bank accounts etc.
Power of Appointments: – Power of Appointment is a right conferred upon a person by the owner, giving him the power to decide the disposal of property.
Power of Attorney: – Power of Attorney is an authority to act on behalf of another person in all specified, legal or financial matters.
Gifts: – Gifts are formal bequest to loved one’s or family members. Gifts can also be ‘inter vivos’ i.e. lifetime gifts. Only gifts to U.S. citizen spouses are free of gift taxes.
Property Ownership: – Property ownership is right to enjoy inherited properties. The owner is also responsible for paying taxes of titles, buildings and other items which they have inherited. Property ownership can be made through formal document, such as a deed.
Basically, an estate planning attorney can guide you through the whole process easily, without the involvements of probate courts and you can have full control of your assets.