Why you should create an estate plan

February 09, 2013 (Press-News.org) Why you should create an estate plan

Article provided by Cohen Fineman, LLC
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Creating an estate plan is one of the most important things a person can do. An estate plan is not just for those facing illness or old age -- one never knows what will happen, and an estate plan can help people prepare for the worst. An estate plan can help people control their assets upon death, and make sure that their families can focus on grieving instead of dividing up the estate.

But, what is the best way to go about making an estate plan? The most typical estate planning tools used include wills and trusts. Wills and trusts are not mutually exclusive, and people can use both to pass on their assets.

Why should I have a will?

When people die without a will, their assets are passed according to intestacy laws. The court will decide who receives the deceased's property and who will take care of his or her kids.

The court will also decide who is responsible for controlling the estate and distributing the property. This person will have a lot of responsibility; he or she will pay the income taxes for the deceased and pay off all of his or her creditors. It is important that this person is someone whom the deceased can trust and who is willing to take on the responsibility. Therefore, it is best for people to appoint this person themselves.

Creating a will can help make sure that people have control over these things. A will can designate who will receive particular assets, can suggest who should be appointed as a guardian for any minor children and can nominate a personal representative.

Why should I create a trust?

Creating a trust can also help people control his or her assets, even after death. People can set up a trust to only contain certain pieces of property or certain assets. One of the many benefits of a trust is that estate and gift taxes can be avoided or lessened when property passes through a trust.

There are many types of trusts, but the two main categories are living trusts and testamentary trusts. Testamentary trusts come into being after the person's death, whereas living trusts are created during the person's lifetime.

Living trusts can also be revocable or irrevocable. A revocable trust allows the person creating the trust to maintain control over the assets and can be revoked at any time. In contrast, once a person transfers his or her assets to an irrevocable trust, he or she cannot make any changes or exercise any control over the assets.

Other types of trusts are also available and the type of trust best suited to an individual's needs varies depending on his or her unique situation.

How do I make a will or trust?

If you need to create an estate plan, it is a good idea to contact an estate planning attorney. An attorney can help ensure that your will is valid and prepare a comprehensive estate plan that minimizes your tax liability. Estate planning is complex, and an experienced attorney can ensure that nothing is overlooked.