A Simple Guide to Estate Planning
The death of a loved one can sometimes create disagreements among living family members when it’s time to discuss the deceased person’s assets. Having an estate plan in place can prevent this discord because it allows you to designate what happens to your assets, leaving your heirs with no question about your wishes.
What is an Estate Plan?
An estate plan is a plan that is created for the purpose of distributing your assets after your death. An estate plan can also cover matters that may or may not be covered in a will. An estate planning attorney can help you create a plan that works for you.
Why is Estate Planning Important?
Estate planning is important because it allows you to protect your loved ones, children, and beneficiaries after your death.
Four reasons why estate planning is important are:
1. You decide who receives your assets.
You control who receives your assets. Without an estate plan, the courts will decide who
receives your property and other assets. This could take months or even years and can
be very expensive.
2. You choose your children’s guardian.
You can choose a guardian who will raise your minor children.
Without an estate plan, the courts will make this decision.
3. It can reduce taxes.
An estate plan is designed to reduce any inheritance and income taxes your beneficiaries
may have to pay. Most people won’t pay estate taxes on the federal level, because estates
worth up to $11.4 million are exempt. Some states have estate taxes or inheritance taxes,
but California does not.
4. It can prevent family disagreements.
An estate plan minimizes the risk of legal battles between family members who may not
agree on how your assets should be distributed. You can even make individual plans for
your heirs, such as creating a trust rather than a lump-sum inheritance.
Steps to Creating an Estate Plan
An estate plan may include any of the following elements, and an estate planning attorney can help you determine what you need.
1. Create a Will
A will is a document that designates what you want to happen to your assets after your death.
You can also use this document to designate a guardian for your minor children. A probate
court judge is required to allow the transfer of assets. This process can be lengthy and
expensive, and it also provides an opportunity for third parties to contest your will.
2. Create a Trust
A trust is used to transfer your assets with the assistance of a third party, or trustee.
Creating a trust also allows your loved ones to avoid probate court, so there are no
court fees or attorney fees after your death, and your beneficiaries can immediately
have access to your assets.
3. Prepare Health Care Directives
These are written statements that designate who will make medical decisions for you
if you are unable to do so. These directives also include a living will, which states the
types of life-sustaining measures, if any, that you want if you are terminally ill or will
die soon without life support.
4. Get a Durable Power of Attorney
A durable power of attorney designates a person who will handle your financial affairs
if you are unable to do so. If you become incapacitated and you don’t have one,
a judge will appoint a guardian or conservator to manage your affairs.
5. Make Beneficiary Designations
Beneficiaries named on bank accounts, stocks, bonds, retirement accounts, and
brokerage accounts can receive funds immediately after you die, rather than
wait for the probate process.
6. Evaluate Your Life Insurance
Life insurance is used to cover your burial costs, as well as any debts owed.
You should make sure you have enough life insurance to provide for your
family after your death.
7. Make Your Final Arrangements
You should express your wishes regarding burial, cremation, and organ
donation. You can also set up a bank account that is payable-on-death,
which will cover your funeral expenses.
8. Protect Your Business
If you are a business owner, your estate plan should include a succession plan,
buyout agreement, or other details about how your business matters will be
handled after your death.
9. Share Your Information
Your executor should have access to your documents, including your will,
trusts, deeds, insurance policies, bank accounts, mortgages, and any
other assets and debts.
By creating an estate plan, you can make sure your affairs are handled according to your wishes, prevent family squabbles, and protect your loved ones’ financial interests.
Thank You to Our Guest Blog:
Content Marketing Manger
Herrig & Vogt LLC
Attorneys at Law
Steve has been writing legal-centric articles for several years now. He started working
with the personal injury attorney law firm Herrig & Vogt in 2019 as the Content Marketing
Manager, which has allowed him to expand on his writing in personal injury,
family law, and much more. Steve strives to offer the public advice on various
laws covering a variety of practices.
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