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Important functions of an estate plan

Some people in Georgia may think they do not need an estate plan because they are not wealthy. While there are several reasons wealthy people need an estate plan, all adults should have some kind of plan in place.

One of the important elements of an estate plan is that it can put a structure in place in case a person becomes incapacitated. This may include insurance as well as powers of attorney that appoint people to handle medical and financial matters for the person.

A will or a trust is also important because the family may not know who the deceased person wanted assets to go to, and the state will decide what happens to those assets. Individuals making an estate plan should keep beneficiary designation forms current for assets such as life insurance and retirement accounts.

For wealthy people, there are several additional considerations. An estate plan can be an important part of reducing estate tax as well as gift and generation-skipping transfer tax. Many wealthy people use their estate plan to create a vehicle for charitable donations such as a charitable trust or a family foundation. With an estate plan, a person may use trusts or other tools to protect assets from lawsuits. An estate plan can also be an element of introducing children to wealth management.

Whether a person has many assets or only a few, an estate plan helps take the burden off family members during a stressful time by making the person's wishes clear. If a person becomes incapacitated without paperwork in place to deal with it, the family may need to go through an expensive process to have a guardian appointed. This may also be the case if the person has minor children, but if there is a will, the children's guardian can be named there.

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