Estate planning involves making plans for the transfer of your estate after death. Your estate is all the property that you own. It can include cash, clothes, jewelry, cars, houses, land, retirement, investment and savings accounts, etc. Estate planning usually has several objectives and goals. They include:
- Making sure most of the estate is transferred to your beneficiaries
- Paying the least amount of taxes on your estate
- Assigning guardians for minor children, if any
Some important terms to know for estate planning purposes include:
Wills: A will is a legal document that lays out the fate of your property afteryour death. It states who receives your property and in what amounts.
Trusts: A trust is an arrangement where you entrust property to one person or an organization. The person or trustee is taxed with managing the property on behalf of your beneficiary or beneficiaries.
Power of Attorney: Power of attorney gives a person or organization the legal power to handle your affairs when you're unable to do so. The person or organization you appoint is referred to as an "attorney-in-fact" or "agent."
Estate planning is something that should be done when a person is legally competent, which means that the person must be of sound mind and at least 18 years old. It should also be done when the owner of the estate is in good health and free from emotional stress. To start estate planning, contact an attorney that specializes in estate planning or a Certified Public Accountant (CPA).
For more insight, read Six Estate Planning Must-Haves.
This question was answered by Chizoba Morah.