What you need to know about estate planning

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Estate planningIn our years of practice, we’ve found that few people—at the outset—like to talk about estate planning. This is completely understandable: most people would rather avoid talking about their eventual death.

However, what we’ve found is that, while it can sometimes be uncomfortable, estate planning can also be empowering. Estate planning lets you decide where your assets will go, who will be the guardian of any minor children, and more. It lets you provide for your family after you’re gone. It gives you peace of mind.

Unfortunately, without estate planning, your family may experience costly legal fees and battles in court when trying to determine how your estate will be divided.

So what do you need to know about estate planning? A recent, helpful article in Forbes outlines the basics of this important process.

Estate planning is, essentially, planning for the distribution of your assets and for the protection of your family after your death. There are a number of estate planning documents that you should consider, including wills, trusts, and powers of attorney.

A last will and testament outlines the division of your assets, from your house and car to small items of sentimental value. In your will, you can determine who gets these assets, whether that is your spouse, your children, other family members, friends, charities, etc.

Certain types of trusts are like a last will and testament in that they provide for the division of assets after your death. However, they differ in a few important ways: you transfer your assets to the trust, and after your death, the trustee of the trust distributes your assets to the beneficiaries you designated. A trust can also avoid probate.

What is probate, and why would you want to avoid it? Probate is a legal process that administers your estate. In the probate process, the court determines whether or not your will is valid (if you have one), identifies all of your assets, pays any debts and taxes you owe, and distributes your property. You might want to choose to avoid probate because it can be a time-consuming, costly process. Letting your estate go through probate also leaves your family vulnerable to legal battles over your will.

Powers of attorney serve as protection for you. If you were injured in a serious accident and fell into a coma, for example, a financial power of attorney would manage your finances and pay your bills for you. In the same example scenario, a health care power of attorney would make medical decisions for you. Setting up powers of attorney allows you to appoint trusted individuals who will protect you in the event of tragedy.

A good estate plan should be customized to your unique needs. Are you married? Do you have children? How old are your children? How much do you have in assets?

If you have young children, for example, you will want to appoint a guardian for them in your will. This guardian would be the person to take care of them, should you pass away before they reach adulthood.

If you have a spouse, you might consider designating him or her as a beneficiary of certain assets—like a life insurance policy or a tax-deferred account. By designating your spouse a beneficiary of certain assets, those assets won’t go through probate—thereby saving your spouse time, money, and hassles.

Finally, you will want to revisit your estate plan from time to time. As your life changes—births, deaths, divorces, buying and selling of property—your estate plan should reflect these changes. Otherwise, it does you little good.

If you have other questions about estate planning, please feel free to call our office.

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About Jenn Messick

I am an attorney practicing at M/V Alaska Law, an Anchorage, AK law firm helping clients all throughout Alaska navigate legal issues in divorce, family law, probate, and bankruptcy. I'm an outdoors person who enjoys hiking, skiing, hunting, spending time with family, and the beautiful scenery in Alaska. Jenn Messick's Google+ Profile

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