Estate planning and why it is important

On Behalf of | May 31, 2018 | Estate Planning

There are several reasons that people in Nevada might want to create an estate plan. Some people may be concerned about taxes and the cost of probate. Preparing an estate plan in consultation with an attorney may help reduce these costs.

Asset protection is another element of estate planning. For example, for a person to qualify for Medicaid, it is first necessary to spend down all assets. Careful estate planning can help protect some of these assets while still allowing a person to qualify for Medicaid. Asset protection may also include buying insurance, such as one for excess coverage in case of a car accident.

One of the main reasons to create an estate plan is so that a person can direct specific assets to loved ones. The estate plan allows the person to decide who will get what assets and when they will receive them. Despite these reasons for having an estate plan, more than half of all adults do not even have a last will and testament.

Another important reason to have an estate plan is to create provisions in case a person becomes incapacitated. Powers of attorney for finances and health care can appoint people to make decisions in these areas. If no preparations are made, loved ones may need to go through a lengthy and costly process of getting a guardianship. A person may also want to think about who will be appointed executor of the estate or, if there is a trust, as trustee. Estate planning documents should be reviewed regularly because a person’s assets may change or the family may change through divorce, death, marriage or birth. It is important to also remember that beneficiary designations, which are associated with assets such as insurance policies and retirement accounts, override the instructions in wills and trusts and so should also be reviewed regularly.