Estate planning, which includes legal documents like wills, trusts, and powers of attorney, is the process of preparing instructions on how to manage your assets after your death. State and federal laws apply to estate planning, and so do taxes. In order to protect your assets, it may be necessary to create legal entities such as limited liability companies (LLCs) or family partnerships. The estate tax and other related issues are a hot political topic, and estate laws change often. It is vital to consult an experienced estate planning attorney, in order to protect your assets and meet the goals of your estate planning process.
Estate planning allows you to decide what will happen to your assets after your death. It allows you and your loved one to save time and legal costs, and avoid financial and administrative hassles. Your estate plan should include two vital documents; a will and a durable power of attorney.
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A durable power of attorney is a legal document that allows you to give directions to another person, who can then make legally binding decisions if you are unable to do so yourself.
A will is a legal document that provides instructions on how to deal with your property after your death.
In addition, other legal documents such as a health care proxy, a living will, and a revocable (or "living") trust can help with decisions should you become incapacitated. A revocable trust can take control of your property before you die, allowing you and your family to avoid probate proceedings.
The basic purpose of estate planning is not simply to distribute property after death, but to reduce inefficiency and taxes throughout the probate process. Most estates are free of federal taxes, and a spouse can leave a surviving spouse an unlimited amount of money free of taxes. Under current law, estate tax will apply in 2020 to estate values over $11.58 million for singles and $23.16 million for couples. The exemption amount is indexed annually for inflation through 2025. Many states also charge an estate tax and/or an inheritance tax.
Estate planning is vital to work towards security and peace of mind for yourself and your family. If you need help at any stage in the estate planning process, you should contact a lawyer experienced in estate planning to ensure your needs are met and your estate is protected.