The Importance of Estate Planning

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300Many people believe that estate planning is only for the wealthy. A person who owns real estate, stocks, bonds or personal effects has an estate. Everyone should have a will, as it dictates how and by whom one’s final wishes are carried out when it comes to their estate. Nobody expects to die today or tomorrow, as death is always seen as far off in the future. The thought of one’s own mortality is not something that people like to think about, as if by ignoring it somehow reduces its likelihood. What happens if someone was to die without planning for it?

 
In Virginia, if someone dies intestate or without a will, a court decides how and to whom assets of the deceased will be distributed. There are some accounts, such as life insurance and 401(k)s, which have a set beneficiary so they have a little bit of planning already built in. The remaining items will be distributed according to law, which may differ from the requests of the decease. The order goes first to a spouse unless there are children from a former marriage. If there is no spouse, then it passes to the children or to the descendants of the children. If there is no spouse or children then it passes to the parents. If the parents are deceased, it then goes to the siblings or descendants of the siblings. If the court still cannot find a relative by this point, then half will go to the closest maternal relative and half to the closest paternal relative. 
 
The courts are not always the fastest at distributing estates, as notices have to be sent and searches must be made. By creating a will, one decides which assets go to whom, how it will be distributed and when. This takes the decision out of the courts and puts it into the individual’s hands. The will determines who administers the process of distributing assets.  The problem is that not everything in an estate is measured in dollars.  For example, if parents were to die without a will and were survived by young children, the courts will decide who receives guardianship of the children. The parents could have made their wishes known in their will about who they want to raise their children in the event of their demise. Children will have a hard enough time dealing with the loss of their parents. Why add to it by leaving an uncertain future ahead of them as different family members fight for custody for months or years to come?
 
Many times problems can also arise within a family as to who gets what as far as personal effects. Having a will can create order to what otherwise can become an unorganized chaos of grab and take before the courts have an opportunity to step in. People are more willing to accept the written words of a will that embodies the final requests of the deceased compared to accounts of “he/she/they said I could have it.” This is particularly important for items such as family heirlooms in which many members of the family are vying to possess it.
 
Taxes should be considered when planning one’s estate, especially should the estate consist of a large sum of money, as estate taxes can be as high as 55 percent. This amount varies year by year, but the majority of Americans are excused from estate taxes, as there is normally an exemption for the first few million of the estate, but this too varies year by year. 
 
Many websites will try and sell cookie-cutter will templates so you can create your own will, but be wary of these. The ability to talk to an individual to hear what and how you wish to leave your estate can lead to a personalized and more accurate will than a template could provide. In addition a will that is drawn up in person with competent legal advice is likely to hold up better in a court of law should it be challenged. If you do seek out legal advice, choose individuals whose primary practice is estate planning, as they will be the most versed on the subject and able to do the work in the shortest amount of time, which is important when you pay by the hour.
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