Estate Planning with Asset Preservation Strategies

Understanding Estate Planning

The website findlaw.com, describes estate planning as follows.

Though often overlooked or put off in favor of more immediate concerns, a comprehensive estate plan can resolve a number of legal questions that arise whenever persons die:

• What is the state of their financial affairs?
• What real and personal property do they own?
• Who gets what?
• Does a personal guardian need to be appointed to care for minor children?
• How much tax will need to be paid in order to transfer property ownership?
• What funeral arrangements are appropriate?

An "estate" consists of all property owned by an individual at the time of his or her death, including:

• Real estate
• Bank accounts
• Stocks and other securities,
• Life insurance policies,
• Personal property such as automobiles, jewelry, and artwork.

An estate plan can accomplish the following:

• Identify the family members and other loved ones to receive the property after death.
• Ensure that property will be transferred to identified heirs, as quickly and with as few legal hurdles as possible.
• Minimize the amount of taxes that will need to be paid in order for the property to pass to others after death. (This will be discussed in the section on taxes.)
• Avoid the time and costs associated with the probate process by utilizing estate planning devices like living trusts and "payable on death" bank accounts.
• Dictate the kinds of life-prolonging medical care to receive should a person be unable to make his or her wishes known when the time comes.
• Set forth the kind of funeral arrangements desired, and how related expenses are to be paid.

Understanding Asset Preservation

Older Americans control a great deal of the wealth in this country. They are also very interested in protecting what assets they have from loss. In addition, seniors want their assets to stretch out as long as possible in order to avoid running out of money well before they die.

It is also important to understand that a great deal of the wealth held by elderly Americans is in the form of home equity. Estate preservation strategies strive not only to preserve the wealth of elderly Americans but also to attempt to convert home equity into cash to be used in the final years of life.

Since the wealth of most elderly Americans is in the form of equity in their homes, asset preservation strategies should focus on retaining that equity for the heirs or using the equity were an inheritance for children is not a concern. For those who have assets and investments and savings, similar strategies can apply. This planning can include strategies to lessen the impact of taxes, strategies to preserve the assets from the cost of long-term care, and strategies to get a better investment return to help the assets grow.