Why should I have an estate plan?

The majority of Americans have heard of estate planning and know that it’s an important thing to think about before tragedy strikes. However, most people underestimate the value of their estates because they do not fully understand what an estate is and what it is comprised of. An estate is comprised of everything that an individual owns: a car, home, other real estate, checking and savings accounts, investments, life insurance, personal possessions. No matter how large or how modest, everyone has an estate and something in common, these material possessions get left behind when they die. By definition an estate plan the anticipatory act of preparing for the transfer of an individual’s wealth and assets after his or her death.

The Advantages of Having an Estate Planning Attorney

It is no secret that estate planning attorneys can be a costly investment. Some attorneys charge hundreds and sometimes thousands of dollars for an estate plan while legal document preparation companies charge as low as four hundred dollars. However, hiring an attorney who specializes in estate planning can be advantageous for a plethora of reasons.

First and foremost, and estate plan is an important legal document that will most likely effect an individual’s family for generations. With a document of this importance, it is best to trust an attorney who specializes in estate planning. Secondly, legal document preparation companies create attorney drafted legal documents that are similar to question and answer worksheets. Documents that are drafted in this fashion, are not tailored to a person’s specific situation. Though these documents are legally binding, due to their impersonal nature, there are key elements that can be missed. For example, an estate planning attorney will counsel individuals by listening to their concerns and goals for their families and future generations. A knowledgeable attorney will utilize their background in family law, community property, and real estate and taxes in estate planning meetings with their clients. Finally, at the conclusion of estate planning meetings attorneys will ask about the outcome of decisions that their clients have made to ensure that they feel prepared and empowered to provide for their families with their completed estate plan.

Funding a Living Trust
Upon meeting with an attorney and completing an estate plan, it’s important to begin funding the living trust. A living trust is funded when it owns something, real-estate, bank accounts, a business, or other personal property. A living trust owns something by transferring the title form the owner as an individual to the owner trustee of his living trust.

Making Estate Plans Bulletproof
Estate planning is an important tool in protecting an individual and their spouse in retirement and in leaving a legacy for an individual’s heirs. It would be a lengthy process to come up with an exhaustive list of the ways to make an estate plan as invulnerable as possible. Instead, listed below are common mistakes that people make when they construct their estate plans:

• Choosing the wrong controlling document: The most fundamental decision in estate planning is the choice of the controlling document that serves as the foundation of the plan. People can choose between using a trust or a will as the controlling document. One of the biggest mistakes people can make is choosing the wrong document for their situation.
• Underestimating the value of the estate: It is a common practice for people to underestimate the value of their estates. For example, people with multimillion- dollar homes tend to claim that the contents are worth very little. In reality, the contents may have a significantly greater value. In a similar fashion, entrepreneurs tend to undervalue their businesses for estate planning purposes.
• Failing to integrate a plan: A plan needs to be well coordinated. A basic problem is making that sure that trust are funded and that assets are correctly transferred.
• Failing to integrate income tax and estate planning: Income tax and estate tax planning are separate disciplines, with different specialists in each. However, for truly comprehensive tax planning, both disciplines must be integrated. Income taxes can devalue assets.

• Failing to plan for a medical emergency: Although it is bleak to think about one’s own demise, it is necessary when constructing estate plans. Obtaining legal documents that designate surrogate decision makers (guardians) who will be given the power to make heath care decisions is imperative. Drafting a living will is also equally important.