Why Is Estate Planning Important To Those With Inherited Assets?

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Estate planning can be a tricky business, and although knowing how your investments and assets will be divided among inheritors after your passing can do a lot to put your mind at ease, it can sometimes add to your stress level if you haven’t been properly informed of all rules and regulations and potential pitfalls during what is essentially a complicated legal process. So what can you do to make sure that you have everything properly squared away and prepared for the unlikely scenario of an untimely passing? The first thing is simple: speak to a qualified and experienced estate planning legal expert.

One thing that a lot of people worry about is how stock portfolios are transferred from one person to another when someone dies, and who should have access to those investments before or after the worst happens. It depends on your specific situation. If the stock portfolio is part of a trust then the choice is likely left out of your hands, and you won’t be able to add another person to the account no matter what you might prefer. If you have complete control over the potential assets, then it’s up to you to divide or distribute the stock as you see fit–before or after your death. Again, an estate planning attorney can help elucidate the finer or more subtle details of this process.

A more important factor that might come into play after a person dies is the laws of the state where the deceased lived. Without a revocable trust, inheritors could be tied up with the court system trying to obtain their rightful assets due to a mundane set of laws that often refuse to change depending on where you live. Sometimes these laws are strict, while sometimes they are more flexible. It’s a matter of researching the rules relevant to your case, but legal experts can handle that as well.

Although most people who are in the business of planning their estate probably aren’t thinking of divorce, it is important to keep in mind that sometimes unforeseen events do occur. If you and your spouse fall out of love and decide to part ways, then beware of what properties belong solely to you and what properties might be communal in nature–i.e. Which ones would be split between you in all likelihood. Inherited assets typically go to the inheritor, and are not split apart to be shared by both parties.

The purpose of estate planning isn’t just to split your assets after your death. Primarily, you would want to do it while maintaining zero tax liability. While this is obviously impossible, most estate planning experts will be able to take advantage of certain rules in the legal code to ensure you and your loved ones pay the least amount possible. When you decide to become a part of this process, you’ll likely write up a last will and testament, decide upon power of attorney, and draft an advanced health care directive. These not only govern where your assets end up, but how they get there and who might have control over decision-making in the event that you can’t make decisions for yourself due to poor health.

If you own real estate, then estate planning is a must. Don’t let chance determine how your family’s belongings are treated after you pass away!

Melissa Thompson writes about a wide range of topics, revealing interesting things we didn’t know before. She is a freelance USA Today producer, and a Technorati contributor.