What is Estate Planning?
Estate Planning is merely the process of making it undoubtedly known how you want your estate to be managed following your passing or should you be debilitated and unable to manage things on your own. The most typical Estate Planning definition is — “the method of creating a plan for the transference and management of your estate following your passing, utilizing a Will, Living Trusts, insurance policies and/or other approaches.” Estate Planning has been around for a lot of years, but it’s becoming progressively more and more normal.
There are a lot of aspects of Estate Planning, but the initial thing you need to do is carry out a thorough examination of your estate assets. Your estate is comprised of all the property you are owner of, including:
- Retirement accounts
After you have a clear understanding of what your estate is comprised of, you can then start the planning.
What’s The Objective Of Creating An Estate Plan?
The reasoning that an estate plan is so vital, is that lacking one, your assets can wind up in legal no man’s land for years. This can put an unnecessary strain on your heirs and other relatives that are left to deal with tidying up your finances. Besides guaranteeing your assets get to the individuals you select, planning can also help decrease income, gift, and estate taxes.
Lacking an estate plan, and particularly a will, the laws in your state are going to determine what happens to your belongings, and the courts are going to establish who gets custody of your children.
7 Common Misconceptions Concerning Estate Planning in Arizona
- Estate planning is just for the rich – Estate planning is not only for the rich. Everybody can benefit from having a plan in place for what is going to happen to their assets and loved ones after they pass away.
- Estate planning is just for the elderly – Estate planning is not only for the elderly. It is never too early to begin thinking about what is going to happen to your assets and loved ones when you can no longer care for them.
- My family is going to take care of everything – Whereas your family might be willing and able to oversee your affairs, it is always a good idea to have a plan in place in the event something additionally happens to them.
- I don’t need an estate plan since I don’t have anything – Even when you do not have that many assets, it is still vital to have one in place. This going to ensure that your loved ones are taken care of in the way you wish them to be.
- Estate planning is too complex – Whereas estate planning can be complicated, it doesn’t have to be. There are a lot of straightforward estate planning approaches that can be utilized to safeguard your assets and loved ones.
- I don’t require an estate plan since I have a will – Whereas a will is a critical part of an estate plan, it is not the only thing you require. A won’t cover everything and can be challenged.
- I don’t require an estate plan since I trust my family – Whereas you might trust your family, there are always instances that can come up that would make it hard for them to make decisions on your behalf. Having an estate plan in place is going to guarantee that your wishes are fulfilled no matter what.
Exploring the Basics- Wills, Trusts and Power of Attorney
Below is a brief explanation of the basics.
A will is legal documentation that specifies who acquires what when you perish. A will appoints a legal representative—referred to as your executor—the individual responsible for managing your assets to the recipients you’ve selected.
This document includes conditions for assets with particular beneficiaries and those without. For instance, your will could declare that your brother receives your 1968 Chevy Camaro, but all other assets in your estate lacking a named beneficiary are required to be equally split between your brother and sister.
Wills are required to go through probate, a legal process in which the court officially allows your appointed executor to start distributing your assets as stated by the will.
The probate process in some states can be demanding, which is why a lot of individuals create trusts. Trusts are legal “receptacles” that hold your assets on your beneficiaries behalf.
Trusts are estate planning devices that help you bypass the probate process, enabling a trustee you appoint to distribute your assets according to the trust’s conditions. The 2 most standard kinds of trusts through estate planning are revocable living trusts and irrevocable living trusts.
- Revocable living trust. This is a somewhat straightforward document that allows your assets transfer outside of probate. While you’re still living, assets stay under your supervision. You can even take the role as the trustee and make modifications as you wish, from designating beneficiaries to adding additional assets to the trust. When you pass away, a trustee you appoint is going to take over and allocate your assets.
- Irrevocable living trust. To bypass estate taxes, think about an irrevocable living trust. These trusts release assets out of your supervision and transfers supervision to a trustee—even throughout your lifetime. Nevertheless, because assets are formally removed from your estate and put into your trust, they retain the benefit of helping decrease estate taxes.
Power of Attorney
What is a power of attorney? POA is legal documentation you sign granting someone you trust with control to make decisions on behalf of you. You should sign it when you are still of sound mind for your POA to be genuine. This is good reasoning to plan initially for your later years, so your affairs will be in order.
Why should I create one? A POA arrangement can be important—even vital—to managing your financial affairs should you suddenly become unable to manage things by yourself. Planning for your future with a POA could decrease complications to achieving your financial objectives, but it might feel like a formidable task. Subject to your circumstances, you may want to speak with an attorney that specializes in these kinds of arrangements.
Arizona Family Law
Naming guardians in your will can be part of your estate plan. You may think you’re too young or don’t have enough money to justify the expense, but if you have children, you have priceless assets. There are many considerations when naming guardians for your kids. However, the process doesn’t have to be expensive or complicated.
There’s nothing better than the peace of mind you will have knowing you’ve protected your family at a time when they need it most. Let us help. Schedule a consultation or contact Ogborne Law, PLC of Arizona today.