ESTATE PLANNING ATTORNEYS
Estate Planning What Is It?
When most people are asked if they know what estate planning is, their answers point to uncertainty. So let’s fix that and help you better understand what is estate planning
Did you know that you already have an estate? If you own anything as almost everyone does, you have an estate. Your personal estate contains everything you own, such as a car, house, other real property, any accounts that you hold in a bank or financial institution, collectables, life insurance, and any other personal possessions. Regardless of the size and value of what you own that is your estate. I am sure that after you die, you would want certain people to receive things from your estate. Whether a family heirloom to a special gift for your children, the distribution of your estate is something that should be planned so that the right people receive it and at the appropriate time. Additionally, you would want this to occur with less fees for taxes, attorneys, and the courts.
Preparing a plan prior to death and naming those that you wish to receive things from your estate is estate planning. Nonetheless, there are many other important facets to quality estate planning. Such as:
-Incorporating not only your tangible valuables, but also directives in passing your ideals such as religious, work ethic, education standards, etc.
-A named guardian and someone to manage the inheritance of any minor children.
-Provision for members of your family that have special needs with no interruption of any government benefits that they might be getting.
-Provision for family or loved ones that are not financially responsible and who may require protection from future creditors or marital dissolution.
-Provision for any life insurance benefits at time of your death, any disability insurance if injury or illness prohibit you from working to act as a substitute for your income, and insurance that would cover any necessary long-term care.
-Incorporate a plan for the transfer of any business that you may own at either death, retirement, or illness/disability.
-Reduce court costs, taxes, and avoid extra legal fees.
-Estate planning, is exactly that, “planning,” and ought to not be finalized quickly. Estate planning is best as a continuous process to best accommodate any changes that may occur in your family, the law, or finances.
Why Estate Planning Is For Everyone.
I’m sure you have heard people say that they are too young for estate planning because they are not retired yet. This is simply not the way to think about it. Remember that you should not rush your estate planning into one visit to your attorney, but rather make a plan that is adjustable in case circumstances change. No one knows how long their life will be, unfortunate situations can happen to anyone at any time. Another misconception about estate planning is that it’s for the rich. This is also a fallacy as proper estate planning is more of a concern for a family who has modest assets since they are trying to preserve all that they can.
Most People Fail to Plan.
The reasons why most people fail to plan ahead for estate planning is all based around their perception and awareness. People reason that they have not accumulated enough assets, they are still too young, too busy, there is more than enough time, they are overwhelmed with the process and don’t know where to begin, who to call. All of these reasons are what keeps most people from proper planning, and then without any warning they are gone and the survivors of their family have the burden of dealing with the estate.
Failure to Plan Results in a State Plan.
So let’s look at the two most common scenarios where you wish you would have planned. The first is if you become disabled. If you cannot work anymore or run your business as a result of either physical or mental disability, and your assets are titled only in your name, an appointee of the court is the only one that can sign on your behalf. In this case, the court and not your loved one control the use of your assets and your care, usually in the form of a guardianship. This becomes expensive, and can leave you in a horrible financial situation if you should recover in the future.
The second is if you die. Without an estate plan, distribution of your assets after your death are governed by the probate laws of the state. Dying without a will is known as dying intestate. If at the time of your death you are married with children, they will each receive a share of your estate. In circumstances where there are minor children involved, inheritance is managed by the court. Where both parents die, the minor children are appointed a guardian by the court.
You can see that failure to plan takes the control not only out of your hands but your loved ones and where minor children are involved.
Feeling Overwhelmed? Best Place to start is with a Will or a Trust.
Let’s look at the basics of estate planning, a will and a trust. A will does not avoid probate, it only provides instructions as to how your estate will be distributed. A will contains your instruction and direction of how the assets which are titled in your name are to be distributed to your heirs. However, prior to distribution, the will has to go through the probate process of the state. In some situations, where the property is located in another state, multiple probates will occur. Multiple probates can turn out to be expensive due to the court costs, legal fees, and additional executor fees. The probate process can range anywhere from a year to several years. Additionally, the files related to probate are open and available to the public. This acts as an open invitation for left out heirs to come and make a claim against the estate, which can further delay the probate process.
Not all assets are required to go through the state probate process. Assets that let you name a beneficiary such as life insurance, annuities, 401k and IRA retirement plans generally automatically transfer to your beneficiary upon your death without the need for probate. While property that is jointly owned can usually bypass probate, unless the beneficiary is not validly named and will require the property to go through probate.
The trust is a better instrument for avoiding probate and favored for estate planning. A revocable living trust can steer clear of probate even in situations where multiple probates might be required. Additionally, unlike a will, a trust can live on long after your death, and offers privacy from the public. Properly planned, your assets can remain in your trust and be managed by the trustee or trustees that you may have appointed. Although a living trust is more expensive than a will to create, the future headaches and expenses it can save is a deal.
Organize Your Accounts, and Designate Your Beneficiaries.
Does any of your family know where you keep your financial documents, property titles, or insurance policies? As you can imagine, not knowing where to find such important documents can be really frustrating on family members. By taking the first step in preparing an estate plan, you will need to gather all of these important documents and keep yourself better organized.
Incorrect wording on titles designation of beneficiaries are a big area that people make errors in. These mistakes can cause serious problems when your surviving family members are trying to make head and tails of incorrect titles and named beneficiaries which are many times invalid or out of date. Failing to specify the correct beneficiary can have harmful penalties on a plan that is tax deferred.
Estate Planning Costs.
Some estate planning can get expensive, depending on the site of the estate. However, if you start early with a will or a trust you can control a lot of the expenses. As you accumulate more assets or your financial situation changes you can either expand or change your estate planning needs. An experienced attorney can guide you with what is most important for your situation as long as you explain your objectives and concerns from the beginning. The one area where you can run up a lot of unnecessary expenses is trying to do it yourself. Leave that for the professionals that do this kind of work for a living.
Plan Now for Peace of Mind.
Think about our own mortality is not a pleasant thought, and most try to avoid that kind of thinking if they can. However, planning now can better prepare you and your loved ones in the event that something happens. Having a plan will bring you and your family peace of mind.