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Top suggestions in basic estate planning, P.1

On this blog, we often provide our readers with advice about simple estate planning and basic things to keep in mind when going through the process. CNN Money recently posted a top ten list of things to keep in mind regarding estate planning, along with a number of other articles discussing particular aspects of estate planning.

One of the things that sometimes keeps folks back from initiating an estate plan is the misconception that estate planning is only the wealthy need to worry about. Estate planning encompasses elements, however, that concern every person. The idea behind estate planning is to ensure that your goals for your family and finances are achieved after your death.

The basic components of an adequate estate plan include a will, a power of attorney assignment, and a living will or health-care proxy. There are many other things that can be done in an estate plan, but these are the foundation.

A will details how your assets will be disposed of when you die. It is also where most people name guardians for their children. Failing to prepare a will can be expensive for heirs, and having no will means the state will decided where your assets go. Further, a will is really necessary even where a trust is already in place, since the will serves to distribute assets held outside the trust.

Trusts are another useful estate planning tool and may be appropriate in some cases. Trusts allow for conditions on how assets are distributed upon the trustor's death, and can help reduce estate and gift taxes. Trust assets also avoid probate, and allow for greater protection of assets from creditors and other liabilities.

In our next post, we'll continue with this topic.

Source: CNN Money, "Lesson 21, Estate Planning: Top Things to know."

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