What Does Estate Planning Comprise Of? | What is How to

Signing a Last Will (Photo credit: cali.org)

First of all, let?s define what estate planning is and what it constitutes. According to Investopedia, estate planning is the collection of ?tasks that serve to manage an individual?s asset base in the event of their incapacitation or death.? This includes the bequeathing of lands, money and other assets to heirs and also the settlement of estate taxes. The individual?s wishes are expressed in detail in a last will and testament as well as a living will for when the person loses the capability to decide concerning his medical treatment. Other than wills, estate planning also comprises of trusts, long-term insurance, and a power of attorney entrusted to someone chosen by the individual.

The Last Will and the Living Will

The two wills included in estate planning serve opposing purposes. Expect the last will and testament to be executed once the person is long gone, mostly a few days after interment. The executor meets with the heirs ? generally, all immediate family members ? to discuss the will?s contents. The executor is usually a family lawyer with whom the individual has consulted about his wills and planning his estate.

Most beneficiaries of insurance policies, fund, and other financial accounts are the person?s spouse and children. Whether or not the children were born out of wedlock or legally in a marital union doesn?t matter. Every offspring receives a portion of the individual?s assets. The only difference is in the size of that portion and the types of assets, such as lands and businesses.

On one hand, the living will states the person?s wishes to be done during his medical treatment. This will is only executed once the individual loses the capability to decide regarding continuing his treatment despite the very low odds of surviving, such as with terminal cancer patients. Sometimes, the individual may state that he doesn?t want his life extended through medical apparatuses and prefer to die in a comatose state. The immediate family may protest to this decision, but in countries or states when this procedure is legal, the patient?s doctor is allowed to execute this kind of living will.

Trusts, Guardianship, and Power of Attorney

In the case of trusts, the individual?s estate includes two types: living trust and testamentary trust. The first type takes effect while the person is still alive while the second type takes effect after the person has died. The individual is the trustor who gives a trustee the right to hold a title or property for the benefit of someone who lacks the capacity to decide or manage these assets. A beneficiary may be mentally incapacitated person or a minor under the care of the individual.

Somewhat related to trusts is guardianship, which applies to the individual?s children or minors under his care while he was alive. When the person dies, these children must be cared for and their inheritance should be managed by someone whom the individual trusts to look after the welfare of the children. Naturally, the spouse takes over this role, but when there?s no one else, the individual must choose a guardian for the child or children.

All these relationships, whether the third-party involved is a trustee or guardian, require a durable power of attorney that gives another person or an entire organization the legal power to handle the individual?s affairs. The appointed person or organization is generally called the ?attorney-in-fact? or an ?agent.?

Other Preparations in Estate Planning

The rest of documents and tasks involved in planning one?s estate include long-term insurance, retirement funds, and funeral arrangements. The estate must also include annual gifting to reduce taxes and setting up funds to lessen the tax burden on the heirs. If you?re a resident of Sydney, Australia and you?re looking for a reputable lawyer to discuss wills estate planning tasks, then look no further than the offices of Clinch Long Letherbarrow.

Source: http://www.whatishowto.net/2012/11/15/what-does-estate-planning-comprise-of/?utm_source=rss&utm_medium=rss&utm_campaign=what-does-estate-planning-comprise-of

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