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Facts About Financial Planning |
Financialplanning | Financial Planning Lawyer | Living Will
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Estate Planning
More Than Just A
Will
Author: Attorney Thomas D. Begley,
III
Financial planning is a centerpiece
of everyone's life. During our lifetime, most of us strive to create
and build upon our net worth. We generate savings in bank accounts,
purchase a home, and eventually enter into other investments such as
stocks, bonds, mutual funds, IRAs and 401-K plans.
Unfortunately, most of us risk losing an unnecessarily large amount of
these assets by failing to plan to protect them.
Recent surveys have revealed that over forty percent of our population
does not have a will. For those individuals, their death often
creates a scenario whereby their family must needlessly squander
funds, which they could have otherwise used, to petition the court for
an individual to administer the estate. |
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In many instances, this insult is
compounded by the assets being subject to federal and state
taxes, which could easily have been avoided. Thus, an integral part of
anyone's financial planning should be an estate plan. |
Traditionally, an estate plan was
simply a will. However, with the growing medical needs of an aging
population, as well as the ever-present spectre of the Internal
Revenue Service, prudent estate planning requires additional
protections for all of us. Even the best written will has little value
if one's assets are depleted in later years by health care costs which
can be mitigated or borne by someone else.
Any prudent estate plan should address three questions:
(1) Where do I want my money to go after I am dead?
(2) How can I protect my estate and myself if I become disabled?
(3) Do I want my life to be extended by life support even though a
medical event has left me in critical condition without any hope of
recovery?
In many instances, these questions should be answered by considering
lawful methods to avoid taxation and to minimize possible
nursing home costs.
The documents, which are necessary to
answer these questions, are a will, living will and
power of attorney.
A will declares who shall
inherit an individual's assets (the beneficiaries) and who shall be
responsible for distributing them to such beneficiaries (the
executor). For young parents and couples, a will can also be used to
appoint a guardian for their children and a trustee to manage a
child's money until they are old enough to handle it themselves.
Frequently, individuals wish to care for their spouse first, then
their children. Often, this intention is reflected in a will. If you
die without a will, though, your spouse is only entitled to the first
$50,000.00 outright. In New Jersey, he or she must split the rest of
your assets with your children, no matter how young or old they are.
If you have no children, your parents step into their place.
Even if you have a will, your assets are not completely
protected. It is necessary to execute a Power of Attorney to
provide to appoint someone to care for you and your assets if you are
disabled. Individuals, who become disabled mentally and do not have a
power of attorney, can only be protected by an expensive and
humiliating procedure known as a guardianship, whereby they are judged
to "incompetent" in the public forum of a court.
Finally, a living will should be executed to announce your
intentions in the event an accident, stroke or other serious medical
event leaves you brain dead or physically depleted of any possible
quality of life. A living will protects your assets from being used
for unnecessary and costly life support. Without a living will,
there is no authority, outside of a court proceeding, to allow a
doctor to discontinue this treatment. |
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