1. What is an estate plan?
According to Investopedia, Estate Planning is “the collection of preparation tasks that serve to manage an individual’s asset base in the event of their incapacitation or death, including the bequest of assets to heirs and the settlement of estate taxes.” Simply put, an estate plan dictates what happens to your assets once you are incapacitated or pass away.
2. Why do I need an estate plan?
Most of us spend a considerable amount of time and energy in our lives attempting to accumulate wealth. As we do this, there also comes a time to preserve wealth both for our enjoyment and for future generations. A solid, effective estate plan ensures that your hard-earned wealth will pass intact to those you intend to be your beneficiaries, instead of being siphoned off to government processes and bureaucrats.
3. If I don’t create an estate plan, will the government provide one for?
The simple answer is yes, but you and your family may not like it. The government’s estate plan is called “Intestate Probate” and guarantees government interference in the disposition of your estate. Documents must be filed and approval must be received from a court to pay your bills, pay your spouse an allowance, and account for your property and it all takes place in the public’s view. If you fail to plan your estate, you lose the opportunity to protect your family from an impersonal, complex governmental process that is a burden at best and can be a nightmare. Then there is the matter of the federal government’s death taxes. There is much you can do in planning your estate that will reduce and even eliminate death taxes. But remember that the government’s estate plan is NOT designed to save your estate from taxes, or make the process easy on your surviving family. While some estate planners favor wills and others prefer a Living Trust as the Estate Plan of Choice, all estate planners agree that dying without an estate plan should be avoided at all costs.
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