Sunday, April 29, 2012

The Reasons Why Estate Planning Is So Important

Many people fail to understand the importance of estate planning. The fact is that if you die intestate, i.e. without making a will, all important decisions such as the raising of your children, the inheritance of real and personal property, and the administration of your estate will be done by the courts, and in the majority of cases your loved ones may have no option but to agree to a court appointed administrator. If there are minors among your heirs or someone who is mentally challenged, the problems increase manifold. Children and spouses from previous marriages further add to these complications.

In the absence of proper estate planning, many times when a second spouse survives, the children from the first spouse may end up with nothing, in spite of the wish of the deceased to provide for them. Or, under court orders, the children may get the bulk of the assets, leaving the surviving spouse in a state where she is unable to maintain the current standards of living. Or, imagine a situation where a husband and wife die together without leaving a will. For adjudication upon the issues of inheritance and administration of the estate, the State would have to decide who died first. The implications of a difference of a few minutes at the time of death can lead to drastically different results for the heirs. The heirs of the one to die first would be left high and dry. In case you do not have an estate plan or one that is properly drafted, all your hard work over so many years may go wasted, as the assets you acquired would be lost and your loved ones deprived of the benefits of your labor.

An estate plan would organize everything in order and not leave your heirs to rummage around searching for whatever papers they can find upon your death or if you become incapacitated. If there is no estate plan, they may not be sure if the documents they find are important, or up to date, or even complete. The only alternative for them then would be to take everything to a lawyer or some other professional in order to find out what he can make out of them. Small things like family heirlooms, or a rosewood table, or some other personal item may lead to squabbles and very unpleasant situations in the family. Even if you think you do not have much, it is important to take steps so that the people you want to benefit inherit your assets, and not be consumed by lawyer fees and estate taxes.

In case of your sudden disablement due to some medical condition, there has to be an arrangement in place for someone to automatically take over the management of your financial affairs. Only then will things continue smoothly, plus there being help for you and your loved ones. This can be ensured through a Durable Power of Attorney, without which even your lawfully wedded spouse will not be able to exercise any right to step in and take over. The Durable Power of Attorney will ensure that your bank accounts are not frozen, and will enable the smooth transfer of property to the rightful beneficiaries.

A properly drafted estate plan envisages all such possibilities and takes care to provide remedial measures, duly supported by legal documents wherever required, preventing problems for you and your family.

The above discourse makes it quite evident the import of having a proper estate plan. If you do not have one yet, you need to go about it while you are healthy and in a position to personally see to the preparation of the plan, as per your wishes.

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