Providing Peace Of Mind For You And Your Loved Ones
Life Planning is what people typically refer to as “Estate Planning” and typically includes Wills, Trusts, and Powers of Attorney, among other things. Believe it or not, you have an estate. In fact, nearly everyone does. Your estate is the sum of everything you own— your car, home, other real estate, checking and savings accounts, investments, life insurance, furniture, personal possessions. No matter how large or modest, everyone has an estate and something in common—you can’t take it with you.
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To ensure that the people and organizations you love the most get what you leave behind, you need to provide instructions stating whom you want to receive, what you want them to receive, and when to receive it. You will, of course, want this to happen with the least amount paid in taxes, legal fees, and court costs. That is life planning—making a plan in advance and naming whom you want to receive the things you own after you pass. However, good Estate Planning is much more than that. It should also:
- Include instructions for passing your valuables.
- Include instructions for your care if you become disabled before you die.
- Name a guardian and an inheritance manager for minor children.
- Provide for family members with special needs without disrupting government benefits.
- Provide for loved ones who might be irresponsible with money or who may need future protection from creditors or divorce.
- Include insurances such as:
- Life Insurance to help cover funeral expenses
- Disability Income Insurance to replace your income if you cannot work due to illness or injury
- Long-Term Care Insurance to help pay for your care in case of an extended illness or injury
- Provide for the transfer of your business at your retirement, disability, or death.
- Minimize taxes, court costs, and unnecessary legal fees.
- Be an ongoing process, not a one-time event. Your plan should be reviewed and updated as your family and financial situations (and laws) change over your lifetime.
Estate Planning Is For Everyone.
It is not just for retired people, although people tend to think about it more as they get older. Unfortunately, we cannot successfully predict how long we will live, and illness and accidents happen to people of all ages. Although people who have built some wealth most likely think more about how to preserve it, Estate Planning is not just for the wealthy. Good Estate Planning means more to families with modest assets, because they can afford to lose the least.
Too Many People Don’t Plan.
Individuals make up excuses to put off Estate Planning because they do not own enough, not old enough or just too busy. Most of the time, the real reason is they do not know how to start the process, who can help them, or plainly do not want to think it. Unfortunately when something happens to them, their families have to pick up the pieces.
No Plan? Your State Has One For You. But You Probably Won’t Like It.
If your name is on the title of your assets and you cannot conduct business due to mental or physical incapacity, only a court appointee can sign for you. The court, not your family, will control how your assets care for you through a conservatorship or guardianship. It can become expensive and time-consuming, open to the public, and troublesome to end even if you recover.
At your death:
If you die without an intentional Estate Plan, your assets distribute according to the probate laws in your state. In many states, if you are married and have children, your spouse and children will each receive a share. That means your spouse could receive only a fraction of your estate, which may not be enough to continue living comfortably. If you have minor children, the court will control their inheritance. If both parents die (i.e., in a car accident), the court will appoint a guardian without knowing whom you would have chosen.
Wouldn’t you prefer these matters be handled privately by your family, not by the courts? Keep control of who receives what and when? And, if you have young children, have a say in who will continue to raise them once you are gone?
An Estate Plan Begins With A Will Or Living Trust.
A Will provides your instructions, but it does not avoid probate.
Any assets titled in your name or directed by your Will must go through your state’s probate process before distributed to your heirs. (If you own property in other states, your family will probably face multiple probates, one per state.) The process varies from state to state, but it can become expensive with legal fees, executor fees, and court costs. It can also take anywhere from nine months to two years or longer. With rare exception, probate files are open to the public, and as a consequence, excluded heirs are encouraged to come forward and seek a share of your estate. In short, the court system, not your family, controls the process.
Not everything you own will go through probate. Jointly-owned property and assets that let you name a beneficiary (for example, life insurance, IRAs, 401(k)s, annuities, etc.) is not under your Will and transfers to the new owner or beneficiary without probate. But there are many problems with joint ownership, and avoidance of probate is not guaranteed. For example, if a valid beneficiary is not named, the assets go through probate and distribute with the rest of your estate. If you label a minor as a beneficiary, the court will probably insist on a guardianship until the child legally becomes an adult.
A revocable Living Trust is preferrable by many families and professionals.
A Living Trust avoids probate at death, prevents court control of assets at incapacity, brings all of your assets together into one plan, provides maximum privacy, is valid in every state, and allows you to change it at any time.
Unlike a Will, a Trust does not die with you. Assets can stay in your Trust, managed by the trustee you select, until beneficiaries reach the age you want them to inherit. Your Trust can continue longer to provide for a loved one with special needs or to protect the assets from beneficiaries’ creditors, spouses, and irresponsible spending.
A living Trust is more expensive initially than a Will, but considering it can avoid court interference at incapacity and death, many people consider it a bargain.
Estate Planning Does Not Have To Be Expensive.
If you do not think you can afford a complex estate plan now, start with what you can afford. For a young family or single adult, that may mean a Will, term life insurance, and powers of attorney for your assets and health care decisions. Then, let your planning develop and expand as your needs change, and financial situation improves. Do not try to do this yourself to save money. An experienced attorney provides critical guidance and peace of mind by accurately preparing your documents.
The Best Time To Plan Your Estate Is Now.
None of us really likes to think about our own mortality or the possibility of not being able to make decisions for ourselves. Not planning ahead catches many families off-guard and unprepared when incapacity or death does strike. There is no need to wait. You can put something in place today and change it later, which is precisely the way to do estate planning.
The Best Benefit Is Peace Of Mind.
The existence of a properly prepared plan will give you and your family peace of mind. Estate Planning is one of the most thoughtful and considerate things you can do for yourself and those you love.
To help us give the best explanation around such a serious matter like Estate Planning, we derived information from:
What Is Estate Planning
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