When it comes to estate planning, people usually think of legal wills. Estate planning not just a will, but it does involve writing one. Estate planning and administration is a series of official steps that allows beneficiaries to prevent probate and minimise the taxes that are incurred. It is a process in which a person writes a living will while nominating the executor status and power of attorney to the trusted associates if the person dies or becomes incapacitated.
Estate planning also enables individuals to have a direct control on how the assets will be treated once they pass away. And it even takes care of measures to prevent access of estate being lost to taxes. In most countries, dying can attract a lot of specific taxes, like estate tax and death tax. Naming your assets or funds as a gift to the recipient is one of the simplest means to minimize the estate tax.
Inclusion of living will is also a crucial part of any estate plan. Usually, a living will is not considered as a legally binding document. However, consideration is given if you are left unable to make decisions, perform your legal rights or incapacitated. Although the living will may not carry much weight, you can surely nominate someone to assume your permanent power of attorney (EPA).
Estate planning and administration is more than just an official will:
If you are incapable of exercising your living will as an officially binding decision, then only a court can challenge your long-term power of attorney. However, the will itself is a crucial part of any estate planning. On the other hand, if you die without writing a will, your state will decide on how to divide your assets after probate. Moreover, in an event of your death without any prior planning your asset’s distribution, your estate will probably be taxed with maximum possible amount.