When people think of estate planning, they tend to focus on the distribution of an individual’s assets and other property when he or she passes away. Although that’s certainly a component of estate planning, there’s much more that a person can do to ensure that his or her intentions and wishes are honored in the case of mental incapacity or upon passing away. This section provides resources related to estate planning, including a discussion of estate laws, tips for creating an estate plan, and an explanation of how probate works.
What Is an Estate Plan?
An estate plan is a collection of legal documents that sets forth how you want your assets distributed when you pass away, and how you want people to handle health and financial decisions if you are unable to do so for yourself during your lifetime.
A comprehensive estate plan can help you feel more confident about the future, knowing your loved ones will be taken care of and that the legacy you leave behind is the one you want. Thoughtful planning now can help minimize taxes and probate fees, and ensure your family will have less to worry about when you are gone; however, failing to make plans for your estate can lead to unintended complications for your descendants.
Estate Planning Documents as Basics
1. Last will and testament
A will gives you the power to decide what is in the best interests of your children and pets after you’re gone. It also can help you determine what will happen to possessions with financial or sentimental value. It typically names an executor — someone who will be in charge of following your directions.
2. Revocable living trust
A living trust is another tool for passing assets to heirs while avoiding potentially expensive and time-consuming probate court proceedings. You name a trustee — perhaps a spouse, family member or attorney — to manage your property. Unlike a will, a trust can be used to distribute property now or after your death. If you have substantial property or wealth, a trust can provide tax savings.
3. Beneficiary designations
When you purchase life insurance or open a retirement plan or bank account, you’re often asked to name a beneficiary, which is the person you want to inherit the proceeds when you die. These designations are powerful, and they take precedence over instructions in a will.
Tips for Plan when your child is disabled.
1. Create a letter of intent.
A letter of intent is defined as a letter of instruction that includes information your family and friends will need if you die or for any reason become unable to act. It should list everything from the passwords to your online financial accounts and personal information that someone would need to step into your life, your home and care for your loved one with a disability. This letter can include medications, daily routine, strategies you use for calming, therapists and other daily living items someone not living in your home may not know about your life.
2. Meet with a lawyer.
Reach out to your local ARC or friends for a lawyer to trust. Some lawyers will do a free consultation. Allow them to help you build a vision for what you want your loved one’s future to look like. While it can be expensive, it can worth the money now to ensure the future is well defined and resources are in place. While with the lawyer, please ensure these factors are discussed.
Why you Need Estate Planning
To Protects Young Children
Nobody thinks of dying young, but if you’re the parent of small children, you need to prepare for the unthinkable. This is where the will portion of an estate plan comes in; to ensure that your children are cared for in a manner of which you approve, you’ll want to name their guardians in the event that both parents die before the kids turn 18. Without a will that names these guardians, the courts will step in to decide who will raise your children.
To Eliminates Family Messes
We have all heard the horror stories; someone with money dies and the war between family members begins. One sibling may think they deserve more than another, or one sibling may think they should be in charge of the finances even though they’re notorious for racking up debt. Such squabbling can get ugly and end up in court, with family members pitted against one another.
To Spares Heirs a Big Tax Bite
Estate planning is all about protecting your loved ones, which means in part giving them protection from the Internal Revenue Service (IRS). Essential to estate planning is transferring assets to heirs with an eye toward creating the smallest possible tax burden for them. Even just a bit of estate planning can enable couples to reduce much or even all of their federal and state estate taxes and state inheritance taxes.
If you would like to learn more about the necessity of estate planning, any one of our estate planning attorneys would be happy to assist you.