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This article and the series of articles to follow, will serve to inform the public about legal issues that effect their daily lives in hopes of empowering the community to take important steps to protect themselves, their family, and their future.
Do you know what will happen to your home, who will provide for your family, or who will manage your business if you suffer from a serious accident tomorrow? Do you know who will inherit your money, who will serve as a personal guardian for your children, or do you have a durable power of attorney in the event you become disabled? Is there a health care directive that outlines your desire to refuse medical treatment (such as life support) if you become unable to communicate? Even though such thoughts are uncomfortable for most, they are an unavoidable part of our reality at every age. Without careful planning and organization, not only will you, your family or loved ones, home, business, or other personal property remain at risk in such cases, but you and/or your loved ones may face estate tax liability exceeding thousands of dollars. Jeopardizing years of hard work and the future of your family may be the result of poor planning. Estate planning is the smart way to avoid risk and arrange for you and your family’s future, as well as manage the use, conservation, and transfer of your wealth.
What is Your “Estate?”
Your estate is basically all your assets. This could include assets held in your name alone or jointly with others, such as bank accounts. Assets also include real estate, stocks, and bonds; as well as your furniture, cars, and jewelry. Assets may also include life insurance proceeds, retirement accounts, and payments that are due to you (such as a tax refund, outstanding loan, or inheritance). The value of your estate then becomes equal to the “fair market value” of these assets, after you have deducted your debts (your car loan for example and any mortgage on your home). A good estate plan should provide for the best use of assets during the owner’s lifetime.
What is “Estate Planning?”
When you make arrangements for your health care needs and the use, conservation, and transfer of your wealth you are engaged in “estate planning.” This process involves much more than merely preparing your will. A well thought-out estate plan is concerned with the creation of an estate to meet the financial and personal needs of the owner and his or her family, and the preservation and protection of the estate from unnecessary taxes and costs.
Planning and funding lifetime needs such as funds for children’s education, income for retirement, replacement of income in the event of disability, and management of the estate in the event you become incapable to care for yourself (in the case of sudden coma, disability or disease, such as Alzheimer’s). These goals can be accomplished by the use of certain tools such as the formation of what is called a funded revocable trust, special needs trust, power of attorney for business arrangements and healthcare decisions, and charitable gifts. These methods of estate planning will all be discussed in greater detail in future articles.
Why is Estate Planning So Important?
Estate planning is important because it helps in avoiding the stress, trauma, legal and financial complications, excessive taxes and expenses associated with an unexpected event or death. Such planning will relieve you from worrying about your future and lead to the secure management of your life, as well as provide for those you love.
Farnaz Kashefi is an attorney with the firm of Tyler & Wilson, LLP. She can be reached at: fk@tyler-law.com
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