What is Estate Planning?
What is estate planning? If you ask ten different people you will probably get ten different responses. Many equate estate planning with death planning.They think estate planning is simply arranging for the disposition of their assets after they die. In reality, estate planning is much more than deciding who gets what when you are gone. Estate planning is a lifetime process of making the necessary legal arrangements to protect yourself, your loved ones, and your assets.
Life Planning
There is a good chance that at some point in your life you will be incapacitated. An injury or illness may result in temporary incapacity. Or it may be a long-term, indefinite incapacity. In either event, estate planning includes planning for this incapacity. It is important that you put in place the legal documents to nominate the people you trust to make your personal, health care, and financial decisions for you if you become incapacitated. Failure to do so will require that a court appoint your guardian. A guardianship is a public court proceeding, and there are expensive and cumbersome requirements which must be followed. With proper estate planning, the need to appoint a court guardian can be avoided in most instances.
Death Planning
Estate planning does cover what happens to your assets when you die. This is much more than just making arrangements regarding who gets your assets. It may include a trust for disabled or minor children. It may address a second marriage situation and blended families. It may include incentive based trusts, and it may provide for the professional management of your assets.
Taxes
Proper estate planning will also address and minimize the taxes. This includes federal estate taxes and Indiana inheritance taxes (with rates which currently range from 36% to 55% for the federal estate taxes), and also income tax issues, especially for assets such as retirement
accounts. There are several techniques and planning opportunities that can be undertaken to minimize or, in many cases, totally eliminate estate taxes.
Planning for Surprises
There are many unpleasant surprises that may occur over the course of a person's life. These include divorce, lawsuits, and bankruptcies. Asset protection planning can be used to protect your loved ones after your death from life's unpleasant surprises.
