Monday, June 8, 2009

What is Estate Planning?

Estate planning is simply giving what you have, when you want, the way you want, how you want, to whom you want, at the lowest possible cost. It is not a bunch of legal mumbo jumbo. The truth is that we come into this world with nothing, and we leave this life with nothing. All of our physical assets remain behind. I am always amazed how we know that death and taxes are a certainty....but, 7 out 10 people die with no estate planning in place. How is that possible? Well, think about it. People are always so busy taking care of the affairs of life on the "urgent" basis that they never take time to think about what would happen if they check out permanently? We spend a lifetime accumulating assets; but, most people spend very little time planning for one's exit strategy.

Estate planning can be a loving act for the benefit of one's beneficiaries. If one fails to make any provision for his or her estate, the state in which you live at the time of your death has a plan of disposition ready for you. However, it may not be the plan that you would necessarily want? When someone dies without a will or a living trust in place, the laws of intestate succession take over. What is that you ask? The state has a set of rules in place to govern where someones property will go if that person dies without an estate plan in place.

Any person over the age of 18 who is of sound and disposing mind has the ability to condition how one's property will be disposed of at the time of one's death; but, it is utterly amazing how often people die without any plan in place. The probate court is the only institution on earth that can change the name of a deceased person's property after one dies. Probate is great for lawyers; but, it is not so good for people. Anytime one can avoid probate, the heirs will come out way ahead. Most probate administration will eat up on average about 7% of the assets passing through probate. A good estate plan will allow one to avoid probate.

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