By Simon Volkov
Estate planning is a crucial element of life planning. It gives people the tools to pass along their property at death and provide directives regarding the type of healthcare they do or do not want if they become incapacitated.
Several estate planning strategies exist. The type required depends on value of estate assets. Small estates valued at less than $100k can usually be protected by establishing a last will and testament. Estates valued at more than $100k might better benefit from a trust.
Within the US, probate is used for estate settlement unless inheritance property is transferred to a trust. Two types of probate exist and include testate and intestate. Testate refers to estates in which a Will has been executed, while intestate refers to estates where no Will exists.
Testate estates usually pass through probate faster than intestate estates because estate settlement directives have been established. With intestate estates, a personal representative must be appointed and confirmed through the court and inheritance property is distributed according to state probate laws.
Many factors are considered when establishing a last will and testament. One of the most important is appointing an estate executor. This person is responsible for all facets of estate settlement. Duties range from filing the Will and death certificate through local probate court to settling decedents’ outstanding debts and distributing inheritance gifts to heirs and beneficiaries.
Estate executors should be able to work well under pressure; be good with finances; and able to comply with paperwork filing deadlines. By law, executors must be 18 years of age and never convicted of a felony offense.
When family discord is prevalent it can be beneficial to appoint a probate lawyer or estate planner to the position of estate executor. Hiring professionals can ease the burden of settling an estate when family members are prone to arguing over who should receive what.
Sadly, death tends to bring out greed. It is not uncommon for families to fall apart when loved ones die. Managing a loved one’s estate when family members are at each other’s throats can be a difficult position that adds more fuel to the fire.
If necessary, estate executors can obtain help from probate lawyers and estate planners. These professionals can be helpful regardless of if family dysfunction exists or not. Probate attorneys can be particularly helpful in settling estates when real estate or other valuable assets are secured with a bank loan.
Estate administrators are responsible for establishing an estate checking account using funds owned by decedents. Throughout probate, the estate must pay loan installments to ensure property is not repossessed. If there are insufficient funds to cover debts, a lawyer can help negotiate unpaid balances to reduce estate expenses.
On average, the probate process for testate estates is 4 months. If heirs contest the Will, inheritance property can be suspended for several months. Intestate estate settlement can be swift or prolonged depending on estate value and outstanding debts.
For individuals with estates valued below $100k, estate planning is a relatively simple process. While it is recommended to hire a lawyer to execute a last will, some people draft their Will using online companies such as LegalZoom.
Two other essential elements of estate planning include granting power of attorney rights and establishing a healthcare proxy. Power of attorney grants authority to a person to make decisions on your behalf if you are unable to do so.
The person designated with POA rights should be trustworthy and able to make difficult decisions on your behalf. If necessary, they can access bank account or sell valuable property including real estate. This decision should be given careful consideration.
A healthcare proxy provides directives about the type of medical treatments you do or do not want to receive. Healthcare proxies are written directives which must be upheld by medical professionals. Therefore, it is crucial to let loved ones know that a healthcare proxy has been established.
Some people believe estate planning is only for the wealthy. The truth is everyone owns something valuable they would like to pass along to loved ones. If property is not protected by a Will or trust it is distributed according to probate law and may not end up in the hands of the person you intended.
About the Author: California probate liquidator and investor, Simon Volkov reveals powerful estate planning strategies, ways to avoid probate, and tips for establishing a trust via his estate planning probate article library at SimonVolkov.com.
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