Estate Plans: What Are They?
For most working Americans, the road to retirement is a long haul focused on efficient money management and prudent investing. We spend decades planning, putting money away, and investing in hopes of building a nest egg that will one day grow large enough for us to one day retire. But what happens after retirement? What happens to all you have built when you or your spouse become incapacitated or pass away? As daunting of a question as this may be, it is a question that needs to be addressed. Protecting your estate and ensuring it will distributed correctly is exactly what an estate plan are designed to do.
By definition, estate planning is a process designed to help you manage and preserve your assets while you are alive, and to conserve and control their distribution after your death according to your goals and objectives. But what estate planning means to you specifically depends on who you are. Your age, health, wealth, lifestyle, life stage, goals, and many other factors determine your particular estate planning needs.
Who Needs An Estate Plan?
Simply stated, anyone with assets that they want to protect. Not having an estate plan means you run the risk of having a court-appointed guardian act for you in the event of your incapacity or care for your minor children in the event that your aren’t able. Not having an estate plan guarantees that your assets will go through the probate process and be distributed in accordance with the laws of your state as opposed to your wishes. Therefore, needing an estate plan isn’t dependent upon having a certain amount of assets, or accumulating a specific amount of wealth. It is an instruction manual to choose and guide who will make financial and medical decisions for you if you are not able to make them for yourself, who will distribute the assets that you have, and in what manner, and who will manage those assets after your death.
Why Avoid Probate?
Probate is the process of filing a court proceeding at your death to notify all creditors and interested parties of the assets of your estate, and the beneficiaries. Amongst many of the unfavorable characteristics of probate, it is key to note that the process is:
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Public
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Typically 12-24 Months; and
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Can Cost Between 3-8% Of The Decedent’s Assets