People often misunderstand the power that a trust can have. When a person hopes to leave money to a person who isn't legally able to inherit property, they might set up a trust to help manage the money and make sure they receive the funds at an appropriate age. Sometimes people just say in their trusts that the money can be inherited by the person at the age of 25, or any other age over 18, and don't put any other restrictions on the money.
Estate planning should change when our lives change. As technological developments have occurred, a large part of our lives have resulted in digital presences. This digital presence might be intellectual property. Photos that are stored on a hard drive are likely owned by the person that took them and owns the hard drive. These photos, along with other digital property, could have value to a person and their family.
A new survey released last month found that many people are interested in planning for the end of their life, through a living will or advanced directive. However, less than a quarter of the people who think that this planning is important actually have done their planning. According to the study, 80 percent of people don't think that end-of-life planning is important.
When people think about retirement, they think about how much money they have saved, what financial products they might use to invest some of their money, and what they want to do when they retire. The truth is retirement planning can consist of more than just 401(k)s and IRA accounts. It can often include estate planning.
People who are single might sometimes think that they are the only ones that need a will. They think that the families of people who are married and have children will just get all of their belongings. The truth is, even married people should have wills. While in many states their family will get their belongings, it is important that people's assets are distributed according to their wishes. Sometimes people don't understand the estate laws of their state, and their assets might not end up going where they think they will.
Many people delay estate planning until later in life. For whatever reason, they decide that they might not need an estate plan. They think they don't have enough assets, they don't have many relatives or they just don't like thinking about it. Estate planning can help every family understand their loved one's wishes and should be done sooner rather than later.
People may have heard of estate tax changes that have come with the New Year. The estate tax changes have raised the exemption of estate taxes to $5 million. That might lead some people to think that estate planning is only for the rich and famous. While this increase does benefit people who have accumulated large amounts of money, it is important to remember that estate planning does so much more than help with tax liability.
What is estate planning, why do people need it, and what does it consist of? Those are many questions people ask when they are considering planning for their family. Most people have heard of wills, but don't fully understand what it covers and what other estate planning documents they might need to ensure the smoothest transfer of assets to their loved ones. It is important to ask questions throughout the estate planning process to fully understand what each document does and why it is important.