How To Protect Your Assets Legally With Estate Planning
Protect Your Assets Legally With Estate Planning
Everyone understands, at least in theory, that they need to legally protect their assets and those of their family. Unfortunately, most adult Americans have little or no knowledge regarding estate planning and very few actually have an estate plan. Estate planning addresses lifetime needs like permanent mental or physical disability and post-death arrangements. It incorporates many considerations and various legal devices to make sure your heirs receive your property according to your wishes. In general, it involves a legal agreement whereby money and assets are held and overseen by one individual for the benefit of another. Yet, estate planning is not limited to the distribution of one’s assets. It serves as a personal and financial safeguard for your family and other beneficiaries. It also helps to ensure your personal, social, and financial goals. A good estate plan protects your assets from taxes and helps you avoid unnecessary probate in court.
Without an estate plan, you will probably end up paying extensive estate, income, and capital gains taxes, regardless of the fact that many people have lost stocks, real estate, cash, insurance policies and even their family-owned businesses in this economic environment. In addition, if you do not have an estate plan, your assets and even your most personal and important financial life decisions will be unnecessarily subject to the authority of a probate court, and not family and/or close friends or even your personal attorney, who are people who would have your best interests at heart.
This is why it’s important for you to understand what estate planning is all about. A good estate plan can help you avoid extensive taxes and protect your assets and personal life matters from the decisions of a probate court. A proper estate plan that helps secure your assets ensures that your most personal and financial matters will be protected from public scrutiny and tribunal jurisdiction. You will be assured that both your assets and personal matters will be managed in the best possible way for your beneficiaries and yourself. Getting a good estate plan is akin to hedging your asset portfolio from a legal standpoint.
Protecting Your Assets From Taxes
The need for tax planning provisions in your estate cannot be underestimated; it may be your only safeguard to postponing or avoiding unnecessary taxation. As most Americans have no estate plan at all, they will subject themselves to untold amounts of taxes upon death, even though this is something that could easily have been avoided. Many who depended on simple life insurance plans and wills have found themselves unprepared for the taxes they will pay. Those without an estate plan can expect to find difficulty in postponing these unexpected costs. Some individuals may have to pay repeated estate taxes of more than 40%. In addition, the estate tax will be applied to assets which would have already been subject to an income tax on inheritance of up to thirty-five percent (35%) and a capital gains tax of up to twenty percent (20%). It is certainly essential to protect and secure one’s life assets from unnecessary taxation. Why put yourself in the position to have to pay taxes if you can legally avoid to?
Protecting Your Assets From Probate Court
Just as it is important to protect oneself from unnecessary taxation, it’s equally important to avoid putting yourself and your assets under the control of a probate court. Generally, probate court is used when somebody dies or becomes physically and/or mentally incapacitated and is unable to make their own personal, health care, and financial decisions. Unless that person has made proper estate plans, it may not be their family and friends who will be making their most important future life decisions. The probate court may end up deciding whether their will is valid and if their property can be transferred or not. With today’s economic uncertainty, it’s extremely important that you are able to control and administer your own financial assets. Without an estate plan, you leave yourself open to the possibility that such important and personal decisions be made by a probate court.
Accidents often lead to incapacity. Without an estate plan, your most important personal and financial decisions will be subject to the judicial authority of the probate court. It will not be someone you have trusted all your life, but rather the probate court, who will now make your most vital life decisions. You will have to secure a probate judge and an attorney to represent your interests, and can expect to pay thousands of dollars in legal fees. You will also be under the continual legal control of the probate court, which will even be able to make decisions regarding your real estate transactions, if you are incapacitated. A good estate plan is normally not subject to probate court.
Even normal deaths are often not planned for, and most people without an estate plan find themselves at the mercy of a probate court for a year, paying unnecessary expenses. Be advised that even a valid last will and testament will not protect your assets from the probate process. Indeed, a last will and testament often opens the door to probate. Upon your death, any assets which are legally titled in your name alone or which name your estate as the beneficiary (of a life insurance plan, a retirement plan, etc.) will go through probate. For all those reasons, it is necessary to protect ones assets and life decisions with a proper estate plan.
Medical Expenses, Lawsuits, Bankruptcy
Even in the best life scenario, there’s always the potential for unexpected medical expenses, a legal disagreement, the loss of a business, financial hardships leading to bankruptcy, and even divorce. A well established estate plan also protects your assets from unexpected financial loss, securing them for your heirs. Estate planning is an important tool that helps give you the ability to utilize the laws put in place that allow you to legally and responsibly protect your assets for the uses that you chose.
