Most people have heard the term "estate planning", but what does that mean? Is it only for the ultra-rich who need to protect their assets from the IRS? Does the average person need estate planning?
Estate planning is often defined as the process by which the assets that one has accumulated over his or her life are disposed of, either at death or during their lives, in a manner consistent with their wishes and in such as way as to minimize taxes, if any.
Everyone has an estate plan. If they don't have a will or a trust, the state has made a will for them. It's called the intestacy laws. "Intestacy" or "intestate" means simply "without a writing". A person who dies intestate has died without a writing (will) that disposes of his or her property. In that case, the laws of every state specify where the property goes. Sometimes, that might be to a place or person other than the person would have chosen. So everyone who owns anything should have a will.
A will is a writing document that conforms to certain legal requirements, such as being signed and witnessed and having the signer's and witnesses' signatures notarized. The laws vary from state to state. In the document, the person sets out how he or she wants her property to be divided. A will is effective only upon death and can be revoked at any time before death. After death, the will has to be probated, which is a legal process that determines what the person owned at death, who the person owed money to at death, and who is entitled to what remains after the debts are paid.
Many people want to avoid probate, which can be done by a variety of techniques. In later posts we'll consider some ways to avoid probate.
No comments:
Post a Comment