Estate planning is a valuable process with many benefits. While tempting to put it off, taking the time to work an attorney and nail down the details can end up protecting financial and personal interests. Here’s a closer look at why to prioritize the process.
There are many different aspects involved in the process, but the common thread among them is sustaining authority. With a will, it’s possible to guide who receives which assets, including jewelry, real estate, and investments. A trust takes it a step further by extending control long-term as rules and stipulations can be put in place as to asset distribution. For example, requiring a grandchild to finish college before accessing certain funds.
Such power is also available prior to death. If an individual becomes incapacitated, such as suffering dementia or falling into a coma, a durable power of attorney allows them to give another person authority to make financial decisions in their honor. The same concept applies to a medical power of attorney, except the choices surround healthcare. In both circumstances, personal preferences and goals can be outlined ahead of time to ensure their wishes are followed.
Estate planning also offers guidance to the court. When a person passes, their estate goes into probate. Without a will in place, the court must distribute the items based on the state’s laws of intestate succession. In Connecticut, children and spouses are given priority, followed by parents and siblings.
As such, there’s a risk of certain loved ones, friends, or organizations missing out on their intended inheritance. The correct planning provides an outline for the court to protect the interests of loved ones.
Precautionary steps can also reduce the associated costs of transferring assets. For example, setting up a trust can minimize taxes for loved ones as well as bypass court costs of probate. It can also reduce the amount of the time they have to wait for distribution. While probate can take months to years to complete, while a trust offers instant movement as it skips the probate process.
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