You may have heard about estate planning. Your estate is composed of everything you own or control – and that includes yourself. But what is the ‘planning’ really about and should you be concerned getting it done?

Later in life – perhaps during your retirement years – you decide that you should make provisions for both you and your estate. This article addresses 5 basic questions that encompass those provisions, the consequence of not answering them, and the urgency for doing so.

Not only is the grantor entitled to administrate the trust but an experienced person too. Hence the attorneys play an important role. If you consider hiring a lawyer you should know what his responsibilities are. Ask him for a living trust sample in order to know exactly what it implies.

The living trust sample exemplifies the content of a policy for the client to know exactly what he deals with. He should know all the structure and what types of revocable living trusts are being used mostly.

Once you decide to go on with your plans, you should know a few things about the irrevocable life insurance trust as well as some of its benefits. The main purpose of the irrevocable life insurance trust is to reduce the size of your estate, and thus your estate tax liability. You will be able to protect your life policy’s value from any creditors and also to know how or when your trustee(s) get the income.

It is very important to name a specialized person who will act in the beneficiary’s interest, and who will be in charge of the assets on grantor’s behalf in case of any accidents that might happen, like incapacity due to accidents, death etc. If you don’t take this into account, after your death, the family has to ask for court’s decision in order to get the grantor’s belongings.

Probate is not only a public process but a time-consuming and costly one. You may wish to avoid the probate process to keep your holdings secret, or to get your assets to whom you want to have them.

Lastly, end of life taxes – called estate and gift taxes – are imposed on the value of your estate and the gifts you’ve made during your life. There are exclusion levels for estate and gift values given before these taxes are imposed, but if you’ve an estate worth some millions of dollars, estate and gift taxes can rob up to 45% of what you’ve left or transferred.

Why is getting these questions answered such an urgent issue? It’s because…

1. You never know when you’ll die

2. You never know when you’ll become mentally incapacitated

3. You never know when you may need long term care

And solutions to some of these requires 5 years lead time – at least – before these circumstances occur!

Resource Author Francisco Rodriguez H.
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