As we move ahead in our life we are working continuously to earn more n more so that we can provide ourselves and our family a comfortable life and while doing that we accumulate a certain amount of assets and wealth. During our life we are there to manage our finance and take care of our assets while adding them, however, we need to think who is going to take care of them when we are not around us due to incapacity or death. Hence, we need to plan our estate ahead of time so that our assets and our family are protected. The estate includes all your belongings such as cash, clothes, jewelry, cars, houses, land, insurance policies, stocks, investments and savings accounts, etc.
Estate Planning Process-
An estate planning is a procedure of transferring one’s assets to another person/ persons called beneficiaries as per the desire of the former. It is done to have an assurance that after your death your wishes are being carried out, your property will be with your family without any dispute or legal interference and ensure privacy of your property. Apart from this, it also lets you pay the least amount of taxes on your estate and also if one has minor children, he/she can assign a guardian for them as well. So, one has to plan this ahead of time to avoid the situation that the New York courts do the same according to the Estates, Powers and Trusts Law (EPTL).
Estate planning is a very complex process and thus before doing it, you must understand the process very carefully and sensibly before executing each step. Below we have summarized steps involved in the estate planning process:
1. Calculate your assets and debts:
The first and foremost step while estate planning is to calculate what is the whole property that you own and what is that you owe from someone that includes various account details, loan details, life insurance, interest and more. You need to calculate your net worth by subtracting liabilities from assets. The list so maintained should be kept securely along with all the documents of the concerned accounts. After calculating the net worth you must check if it is accountable for federal and state estate taxes. If it is not liable to taxes, you need to plan your estate as per your personal situation and to take care of you if you ever become non-viable or die.
2. Consider your monetary needs:
If you die without a plan, your family might go to probate to get your property which can be a money and time-wasting process depending on the state you live in apart from the taxes that your property is liable to (if applicable). Hence, you must ensure that your estate must be planned ahead of time to assign beneficiary of your choice, avoiding the probate and your representative in case of your incapability.
3. Consider the needs of your loved ones:
Your personal situation must also be considered. If you own a blended family or minor children or you are single, etc., you must ensure the balanced distribution of the assets while avoiding probate. If you have children below the age of 18 or children/relatives with special needs, you need to appoint a guardian to take their responsibility and a trust or conservator to provide monthly funds.
4. Asset protection:
An important aspect of estate planning is to protect your assets by minimizing expenses and taxes. Your estate plan must be strategically so designed to transferring your assets in such a way which avoid dispute and taxes. You can opt for a trust or a contractual transfer in such cases as they will meet your goal while protecting your assets.
5. Pen down your wishes:
Whatever you have planned for your estate, it must be legally documented to be an official else verbal announcement or communication will not help you later. The documents include a will to declare your wishes for dispensing property, a living will that states your end-of-life wishes, financial and healthcare power of attorney to handle your financial and medical affairs while you are unable to do so on your own. Apart from these, you must designate beneficiaries in your life insurance policies, retirement or saving accounts, etc. so that they will reach where you want them to, after your demise.
Also, you must ensure to review these documents regularly and update them according to your current life.
6. Fiduciaries designation:
To execute your estate plan, you need some representatives of your choice who are trustworthy and can act on your behalf responsibly in your absence such as an executor mentioned in your will, trustee, custodian of your minor or special need dependents, personal representative of your power of attorney in case of you become non-viable. You must ensure that they are willing to take the responsibility bestowed on them, and they are aware of it as well. Also, they must know the location of your estate planning documents. Fiduciaries can be a close friend, family member, corporate trustee, etc. Also, you must mention at least two representatives in every document so that if due to any reason the first person is unable to take the responsibility or is dead, then there is the other one to do that else the matter will go to probate and the representative is chosen by the court according to the proceedings.
Irrespective of your age, the value of your estate, your marital status, etc., every person must plan their estate. If you don’t, you and your family might have to face a severe impact at the unexpected events. Hence, you can secure your family, estate and yourself by managing your assets properly while alive or after death. We advise you to seek help from an estate planning lawyer and start planning now to live a peaceful and relaxed life.