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Estate Planning And Letter Of Instructions
Estate planning is the process of disposing off an estate. It typically attempts to eliminate uncertainties over the administration of a probate and maximizes the value of the estate by reducing taxes and other expenses. A guardian is always designated for minor children and beneficiaries in case of incapacity. |
Estate planning involves devices like wills, trusts, beneficiary designations, powers of appointment, property ownerships, gifts and powers of attorney which may be either a financial power of attorney or a medical power of attorney. All estate planning attorneys advise their clients to create a living will. Some may have both a living will and a health care power of attorney. Some others who wish to give complete discretion to a loved one have only a health care power of attorney.
The tax code allows wealthy people to set up a charitable remainder trust or a qualified personal residence trust to own their personal residence, yet leave if for their children without having to pay estate taxes.
Since life insurance proceeds are not taxed, a life insurance trust could also be used to pay estate taxes. However, if the decedent holds any incident of ownership, the proceeds will remain in his estate. The trust vehicle is used to ‘own’ life insurance policy and must be irrevocable in nature to avoid inclusion in the estate.
Mediation serves as an alternative to a litigation to settle disputes. At mediations, members of the family and the beneficiaries discuss plans on transfer of assets. Creating an estate plan through mediation allows people to confront the issues head-on and design a plan that would minimize any chance of family conflict and meet financial goals.
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Estate Planning And Letter Of Instructions
