Some people think about estate planning and say, “Oh, that’s when you draw up your last will.” In fact, a properly crafted estate plan could include other legal devices.
First let’s look at some things that a will can accomplish.
Asset Transfers
You can indeed arrange for the future transfer of your financial assets to your heirs through the execution of a last will. You name an executor or executrix to administer the estate, and he or she conducts the business of the estate after your passing.
Nominate a Guardian
If you have minor children you can nominate a potential guardian in your last will.
Forgiving Debt
If you wanted to forgive any debts that are owed to you it would be possible to make this declaration in your last will.
Now let’s look at some things that a will cannot accomplish.
Probate Avoidance
Some people would like to arrange for asset distributions to their loved ones outside of the process of probate. When you use a last will to direct the transfer of your assets the estate must be probated.
Tax Efficiency
Assets that are being transferred via the instructions contained within a last will are potentially subject to estate taxes on the federal and state levels. A will is not a tax efficient device.
Incapacity Planning
There is no way that you can use a will to empower agents of your choosing to make personal, financial, and/or health care decisions in your behalf in the event of your incapacitation.
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