What is Estate Planning
This is simply the process of arranging for an orderly transfer of your assets to the people you want to receive them, it involves identifying who you want to give your assets to and when, either in your life time or at death; but sometimes done after death).
Importance of Estate Planning.
An Estate Plan Protects Beneficiaries
If estate planning was once considered something that only high net worth individuals needed, that’s changed. Nowadays many middle-class families need to plan for when something happens to a family’s breadwinner (or breadwinners). After all, you don’t have to be super-rich to do well in the stock market or real estate, both of which produce assets that you’ll want to pass on to your heirs. Even if you’re only leaving behind a second home, if you don’t decide who receives the property when you pass away you won’t have any control over what happens to it.
An Estate Plan 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.
An Estate Plan 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.
An Estate Plan 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.
11 things to do before you die
Even people with modest assets can benefit from end-of-life planning, which encompasses much more than just writing a last will and testament. As we all know, death doesn’t discriminate by age or any other factor.
1. Gather Important Documents and Contact Information.
Property deeds, vehicle titles, official certificates (birth, marriage, etc.), the contact information for your attorney, insurance broker, doctor—all of these are things you can gather and put in the same, safe place now to make it easier for your loved ones later.
2. Execute a Last Will and Testament.
A will is one of the most important estate planning documents you can have, as it details where you would like your property to go after your death.
3. Complete a Living Will or Advance Directive.
A living will or advance directive is a legal document in which you name someone to communicate with medical personnel regarding your treatment preferences should you become incapacitated or otherwise unable to express your preferences yourself.
4. Put in Place a Power of Attorney.
A durable power of attorney allows you to name someone to be in charge of making decisions for you if you become incapacitated.
5. Establish a Living Trust.
A living trust can be a great way for you to make sure your wishes are followed after your death, as well as providing for fast distribution of your assets to beneficiaries, avoiding estate taxes and keeping your financial affairs private.
6. Update Your Beneficiaries.
If you have life insurance, retirement accounts, pensions, or pay-on-death (POD) or transfer-on-death accounts, make sure your beneficiaries are up to date, as these accounts transfer according to their beneficiary designations; your last will does not control them. Any time your family situation changes is a good time to review your beneficiaries.
7. Secure Your Digital Assets.
Along with online bank, investment, and shopping accounts, many people also have social media accounts that need handling upon the death of the owner.
8. Plan Final Arrangements.
Final arrangements can include organ donation, as well as funeral plans, including how they are to be paid for. Pay-on-death bank accounts are often the best way to handle funeral expenses.
9. Make Copies and Store Your Documents.
Once you have gathered all your estate planning documents, make copies and store the original and copies in a safe place, such as a fireproof safe in your home or a safe deposit box.
10. Talk With Your Loved Ones.
Just getting everything down on paper is a great step forward in estate planning, but talking with your loved ones about your wishes is priceless. The clearer they are on what you want, the more likely it is that your wishes will be followed—and the fewer problems they will have, as they won’t have to guess your intentions.
11. Keep Everything Current.
Once you put together your estate plan, don’t just put it in that safe place and forget about it. At least yearly, perhaps on your birthday, you should revisit the documents to make sure they still reflect your intentions.
Get help
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.
