Most people probably know that estate planning is important and that it is something that should be addressed sooner rather than later. Still, many people tend to postpone planning for the inevitable because they are forced to face their own mortality. And even more people put it off because they don’t fully understand the core objectives.
The overarching goal of estate planning is to protect your family and your assets: 1) during your lifetime, to protect your loved ones should you become incapacitated, and 2) on your death, to provide for your loved ones and to facilitate a smooth transfer of your assets to heirs. This primary goal, though, comprises several core objectives.
Through hard work and smart decisions, you have managed to put together some assets –insurance, real estate, stocks and bonds, and so on. So upon your death, you don’t want these assets to be mishandled and eaten up by legal fees and court costs. You want them to pass on to loved ones, family members, and heirs. This is the number-one objective of estate planning. Without an estate plan, your dependents (if you have them) could be left in a precarious financial position.
The tools and instruments of a sound estate plan are many and varied, but an experienced estate-planning attorney can help you sift through the options. Insurance, for example, can help protect your assets and provide some protection for your loved ones. You could also draw up a will or set up a trust to ensure that your assets flow to designated heirs.
The main thing here, though, is to use estate planning to minimize financial threats to your assets. These threats include estate taxes, probate, and debt associated with end-of-life care. A carefully constructed estate plan can minimize such threats and help your preserve your assets for family members and heirs.
It’s also important to protect your assets from creditors and sometimes from the spouses of family members. In this case, an irrevocable trust (also known as an asset-protection trust) is probably the best instrument.
With a revocable living trust, the trust maker is still considered the owner of the assets, which makes them susceptible to creditor collection. With an irrevocable trust, on the other hand, the assets become the property of the trust, and the trust maker doesn’t legally own them. Further, the terms of an irrevocable trust cannot be altered, and the trust cannot be canceled, which can provide the protection from family member’s spouses that is sometimes needed.
The purpose of an estate plan isn’t confined only to matters that arise after your death. It also has as an objective managing your assets if you should become incapacitated in any way. Generally, it’s a way for a person to prepare for incapacitation when afflicted by a cognitive disorder such as Alzheimer’s.
Without an estate plan in place and in the case of your incapacitation, family members may have health care and financial decisions – decisions that may, in fact, run contrary to your wishes. But if you have, say, a revocable living trust, the successor trustee can step in and handle affairs according to your stated wishes in the trust.
The best way to facilitate a smooth transfer of assets is by avoiding the protracted and expensive legal process of probate. You certainly don’t want your hard-won assets that were supposed to pass on to family members eroded by probate expense.
A living trust provides an alternative way for a person to own assets. Instead of owning the assets herself, that person owns them as a trustee of her own living trust. And then when she dies, the successor trustee distributes the assets to the designated beneficiaries in accordance with instructions in the trust. The process is smooth, effective, and financially painless.
These core objectives should demonstrate how vitally important timely estate planning is. At Legacy Law Group of Northern Virginia, we are specialists in this area, and our experienced attorneys can help you protect and preserve your assets and facilitate a smooth, effective transfer. Contact us today for more information.
At Legacy Law Group of Northern Virginia, we are specialists in estate planning, especially with respect to estate tax and gift tax. Our goal is to help you protect and preserve your assets and facilitate a smooth, effective transfer. Just call us at (703) 492-9955 or contact us using our contact form for more information.