Proper Estate Planning Takes Care Of Assets Before And After Death, And In Case Of Incapacitation.
It is about more than just having a will that would state who the deceased person wanted to take their possessions. Estate planning would involve what I call a “life plan” as well, meaning how the person would hold assets while they were still alive. It includes what would happen if they were to get sued. For example, if they owned everything outright, then people could come and take what they owned.
However, if some estate planning or asset protection work had been done, then companies, trusts or other entities could be created that would own or hold those assets. The person would get to use them. They just would not own them anymore. Either a company or a trust would own them.
These layers of protection could be created so that if, for some reason, somebody decided to sue the person and their insurance was not enough or perhaps they did not have any coverage, then at least the person would not lose their possessions or anything else that had been put in trust. This would just be one aspect of it.
The other aspect would address the situation in case a tragedy occurred. For example, if a person had a stroke or a heart attack, and were still alive but no longer competent to take care of their own affairs, a power of attorney would be used.
A financial power of attorney would allow someone else to sign checks off on the person’s bank accounts so they could pay bills. This would prevent the person losing their home in a foreclosure because they were unable to pay their mortgage.
A healthcare power of attorney would allow the designated person to make medical decisions for the incapacitated person since they would not be able to make those decisions on their own.
People would generally have to do life planning as well as an estate plan.
Are Most People Surprised With How Many Assets They Actually Have?
People would actually be shocked to see how many assets they have. Someone who had undergone a tragic loss due to a fire, a theft or something like that, where they lost the majority of the things they owned, would realize how expensive it can be to replace those things. Individual items in a closet may be worth a $1 for a shirt or $5 for a pair of pants, but it would cost quite a bit of a fortune to replace everything they owned.
What Happens If The Person Does Not Want Certain Family Members To Have Certain Parts Of The Estate?
There are always situations where one child may have gotten more from mom and dad while they were alive, than another or something like that. Hurt feelings may show up even in 60 year olds who were inheriting things from their parents who had passed away in their 80s and 90s.
These feelings can be very real. On the other hand, the parents would not want a child who had been a bad apple to take the money and lose it, destroy it or just waste it.
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