Most of us have heard the saying "nothing is certain but death and taxes." When it comes to estate planning these two things, death and taxes, should be at the forefront of everyone's mind. That being said, there are numerous ways to plan for the inevitablity of death. Most estate plans include creating a Will, setting up Trusts and obtaining life insurance policies.
If you do not plan your estate now a state legislature will divide it up when you die. The one size fits all approach taken by your state legislature will most likely not divide your property the way you would divide it. The legislature is not going to know that you want your musical genius nephew Jimmy to have your complete Elvis collection and not your tone deaf son Roy. More importantly, the legislature is not going to know who you want to have custody of your children or who you want to administer your estate.
Create A Will
EVERYONE SHOULD HAVE A WILL! A will is a legal document that specifies who will manage your estate and who is to receive what at your death. A will must be in writing and must meet certain specific requirements to be valid. In most states, the person making the will must sign the will at the end and the signature must be witnessed by at least two other individuals. Most states prefer that the witnessess be uninterested parties to the will. The witnessess must also sign the will in the presence of each other and the person making the will. The will must also clearly identify the property to be bequeathed, the individuals to whom the property is bequeathed (the "beneficiaries") and that the person making the will intended to leave the property to the beneficiaries at his or her death.
To obtain the specific requirements for a valid will in your state contact an estate planning attorney in your state. There are also computer programs that allow you to create your own will. The problem with these programs is they may not meet the requirements of your state.
Consider Setting Up A Trust
If your estate is large enough you may consider setting up a trust to avoid estate taxes upon your death. A trust is a property interest (money, home, car, etc.) held by one person (the trustee) at the request of another (you, the person setting up the trust) for the benefit of a third-party (the beneficiary). Most trusts allow you to name yourself as the trustee if you wish. There are several different types of trusts that can be set up including active trusts, blended trusts, blind trusts, revocable trusts, irrevocable trusts, etc. To set up a trust contact an attorney in your state who specializes in estate planning. Do not set up the trust yourself. You will most likely not meet all of the legal requisites and the trust will be declared invalid.
You may also set up a trust funded with the proceeds of a life insurance policy. Although there may not be any actual funds in the trust at the time it is set up the life insurance proceeds will activate the trust upon your death.
Other Estate Planning Articles
Estate Planning and the Enhanced Life Estate Deed, The Difference Between the Enhanced Life Estate Deed, Warranty Deed and Quit claim Deed, The Traditional Life Estate Deed, The Revocable Transfer on Death Deed and California's Revocable Deed .
