What is an Estate?
The mention of an estate sometimes brings to mind the sprawling English countryside and astute gentlemen walking the grounds of their property. This is actually a not so far fetched thought, as the modern meaning for an estate is literally used in terms regarding the entirety of a person’s net worth. To set an estate up requires careful planning however, and goes beyond just drafting a will as a part of retirement planning.
Estate planning is a process of anticipating and arranging the distribution of wealth and assets to eliminate uncertainties, to maximize value, and reduce expenses. It’s an overarching assessment of property, the ownership of it, and the amount of control attributed with it. It explicitly declares all assets “in your name” and can make allotments for joint ownership among two or more parties. There are three common categories of estates: gross estate, residue estate, and estate debt. Unless explicitly set aside, distributed, or designated in a Trust to a specific beneficiary before death, any property placed under the umbrella of the estate falls under the power thereof.
An estate is typically made up of large items that make up one’s net worth, such as: land, houses, buildings, businesses, investments, bank accounts, and retirement accounts.
Why Can Having One be Important?
Creating an estate is especially important if you have a wide variety of assets distributed across diverse mediums, namely – physical assets such the one’s mentioned previously. It gives you a say as to show your wealth will be distributed, to whom, and how you will be taken care of in the end after death, or if you become incapacitated. There are several additional benefits that you can take advantage of right now such as tax credits and reductions and lock in the full value of your assets.
Many families a thrown into turmoil and disagreement after a death, even when a will is present, because it is not specific enough. Estate planning allows a person to sit down and take every asset they own into account, where it should go, how much of it and when. When the sum of your estate is carefully planned and allocated in explicit language, you can effectively avoid hassle and legal squabbles that are far too common. In a addition, you can designate a power of attorney to make decisions on your behalf, in case there should be any grey areas regarding your estate.
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