Estate Planning is one of the most important steps any person can take to make surer their final property and health care wishe are honored, and that their loved ones are provided for in their absence.
Do I Need an Estate Plan?
Yes. Estate planning is not just for the elderly and wealthy. One glance at the news demonstrates that far too many young and middle age people die suddenly, often leaving behind minor children who need care and direction, and many unanswered questions and unnecessary expenses for other loved ones.
Estate planning needs to be factored into your overall financial plan, along with your children’s college tuition and retirement needs.
Estate planning also plans for mental or physical incapacity resulting from accidents or illness by allowing you to control, beforehand, how you and your property are to be cared for if disaster strikes.
Regardless of your age, or the size of your estate, an estate plan can help you and your family in many ways, both before and after your death:
- Determine what happenss to your property – who, what, when, and how. You can apportion property among your family members, your friends, and charities that are important to you.
- Decide whether your business will be sold or stay in the family – and if so, who will run it.
- Determine who will be in charge of carrying out your wishes after your death or incapacity.
- Determine who will take care of your children and how they are to be taken care of.
- Save money on probate, taxes and other expenses of settling an estate.
- Set forth the kind of funeral arrangements you would like and how related expenses are to be paid.
- Coordinate estate planning with your other financial planning during your life.
Below are just a few of the estate planning tools that can be used to accomplish your goals:
Will: Although a will may not avoid probate, it will allow you to direct how your assets are distributed and to make other arrangements, such as guardianship of your minor children.
Joint Tenancy: Property held in joint tenancy can avoid probate because it transfers directly to the surviving joint tenant upon your death.
Testamentary Trust: This trust is created by your will upon your death, and can provide for continued support for your surviving spouse. This can also be used to control the distribution of your estate to your minor children, to protect your children and your estate.
Pour-Over Will: This will is used in conjunction with a trust that is established before death. The will transfers, after any specific gifts, the remainder of your estate into a trust. Distribution adn management of the assets are then determined by the trustee through the trust instrument, and not by probate.
Living Trust: This trust is established before death, and may be revocable or irrevocable. During your lifetime, some or all of your property is put into the trust to avoid probate and manage assets. The trust may also reduce probate adn administration costs, make assets more rapidly available to beneficiaries, adn protect the privacy of you and your family.
Premarital and Postmarital Agreement: These agreements may be appropriate, for example, in second and third marriages to protect heirs of prior marriages.
Life Insurance: Life insurance proceeds pass outside probate directly to the named beneficiaries.
Durable Power of Attorney: This instrument allows you to appoint the person you want to make decisions about your assets or your health care in the event you become incapacitated. This helps prevent many problems and unnecessary expenses by planning for even the unexpected.
Living Will: This advance directive allows you to make your own end-of-life health care decision, and can relieve that great burden from your loved ones.
To determine what estate planning tools may be right for you, talk to an attorney and tax professional. If it has been more than two years since you last reviewed adn discussed your plan with your attorney, it may be wise to schedule a follow-up appointment. Any significant change in your life, income, business or family may also require reviewing your legal estae planning documents.