Getting Started With Estate Planning (PART 1)

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The term “estate planning” tends to conjure up images of a practice that only pertains to wealthy individuals. But this simply isn’t true.

What will happen to your assets when you pass away? Even if the amount of assets you own isn’t impressive, it’s still important for middle-class families to go through the process of estate planning so that it passes on as they desire.

Middle-class families often don’t think about estate planning until they have a major life event or something tragic happens. But it doesn’t need to be this way! Estate planning is the process of arranging for what happens to your assets after you die and can help avoid probate, lengthy court battles, and unnecessary stress on your loved ones when you pass away. Estate planning also provides peace of mind that all details will be taken care of in advance.

Middle-class America is an endangered species. With the cost of living and the economic downturn, you need to be proactive in your financial planning. You can’t rely on Social Security as it’s not enough, and most Americans don’t have a pension plan; we’re all on our own when it comes to retirement savings plans. If you want to retire with some dignity then start Your estate plan might be as simple as a will that denotes the beneficiary of your retirement account. It might be very complicated and include several trusts for varying purposes plus your will.

Here’s everything you need to know before getting started with estate planning: -What is an Estate Plan? An estate plan is essentially a long-term financial strategy that includes provisions for the distribution of assets at death. -Who needs an Estate Plan? Everyone should consider putting together an estate plan.

It’s your duty to ensure that your assets are distributed in a way that benefits you and your loved ones.

Want to know the basics of estate planning?

1) Providing for your own needs as well as your loved ones. It also entails being prepared for the possibility that your ability to provide for everyone may be compromised at some point.

2) Ensuring that your assets will be distributed to your loved ones as you see fit. You might want certain assets to go to certain people. Maybe there is a charity you would like to see get part of your estate.

3) Minimizing taxes. For most of us, the government is the last entity we want to receive our assets.

4) Deciding guardianship for any minor children if you don’t decide, the state is likely to make that decision on behalf of you

It’s very important for you to have an estate plan. Why? Because without one, your state of residence will follow its inheritance laws and the disposition of your assets could be at risk. If you die intestate, certain loved ones may receive nothing from your estate, or worse yet, the state might keep everything!

If you are remarried, estate planning is an important conversation to have. You may need to make plans for your kids from your previous relationships if your new spouse does not share assets with them. Here are some items that should be considered in order to protect them:

-Your will (who gets what)

-Trusts (providing income or assets for children)

-Power of attorney (in case of incapacity)

-Guardianship and custody determination documents (if necessary)

Are you living with someone but not married? That person would be unlikely to receive anything under the laws of most states. Avoid unintentionally disinheriting someone you love.

Are you in a committed, unmarried relationship? If so, it’s important to be aware that there are certain legal implications for your partner.

-Under most state laws, an unmarried partner would have no claim on anything if they were not included in the will or living trust of their deceased partner.

-If you aren’t married to someone, but have children with them and want to be sure that they are provided for, then it may be advisable to create a trust (or agreement) between partners detailing how everything will be handled if one person passes away.

The prospect of retirement can be daunting. If you are in the middle class, or even if you are well off but don’t have a pension plan, it is important to start your estate planning early. Estate planning allows us to provide for our loved ones and minimize taxes by knowing what we want to be done with our assets when we die. It also gives us peace of mind that someone will take care of children who may not be beneficiaries under state law should something happen to us unexpectedly.  The basics of estate planning include providing for yourself as well as others, ensuring distribution according to your wishes, minimizing taxes through various trusts, and deciding guardianship arrangements for any minor children before they become an issue later on without a trust created between unmarried partners that share children.

Call today for a FREE consultation

 

Theron Morrison

Theron Morrison

Utah’s top bankruptcy and consumer protection attorney.

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