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Why everyone needs estate planning, not just the rich

Many people may believe that estate planning only benefits the elderly or the very wealthy; however, estate planning is important for everyone, even those with limited assets. Estate planning includes wills, but it also includes living trusts.

If an individual dies intestate, or without a will, the state determines the distribution of his assets as well as assigns guardians to his children if they are minors. Parents of minor children are encouraged to have wills drawn up because the document gives them the power to decide who will raise them. Additionally, a will clarifies who will pay the bills for the estate and who will share the remainder of the assets.

Many people create living trusts in order to avoid probate. Probate is an elongated legal process in which the court supervises the manner in which the decedent's assets are distributed. People prefer to avoid probate for two reasons: the process may take months, or even years, and the deceased person's affairs become public knowledge.

A living trust enables individuals to transfer any assets they legally own to a trust, such as residences, automobiles, and furniture. The individual appoints a trustee, who will be responsible for the distribution of assets upon his death. It is a good idea for married couples to have separate living trusts, because the likelihood is great that that one will outlive the other.

Even though the law can sometimes be confusing, it is important for people to understand why certain legal documents are encouraged. It never hurts to sit down with a legal professional to go over estate planning options, as well as gain knowledge in order to make sound choices.

Source: Market Watch, "Estate planning for the rest of us Why everyone needs a will and a living trust", May 21, 2013

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