Your estate is everything you control or own, such as your assets, debts, and property. Regardless of whether you’re single, married, have children, or have no financial dependents, your estate will still need to go somewhere when you pass away. For that reason, you should create an estate plan.
What Is Estate Planning?
Estate planning is the process of making a plan that shows who will receive your assets. It helps you prepare for what will eventually happen to your estate after you pass away. In addition, it reveals how you want a particular individual to handle your affairs when you can no longer take care of them on your own for some reason.
Notably, an estate plan explains what you want your loved ones or caretakers to do if you become debilitated and can no longer take care of yourself. It covers medical care, long-term care, and the person or group of individuals who will manage your finances and take care of your children if needed.
That being the case, you can start your estate planning today by visiting Hopkinsroden.com. They’re an expert team of attorneys committed to providing quality legal services on a cost-effective basis. And don’t forget that hiring an experienced estate planning lawyer can ease your task significantly.
Having a will prepared in advance will make those you’ve left behind handle your estate with ease and probate will not be as daunting to accomplish. Once a person passes, the emotional aspect of their passing is already too much to handle, and an unorganized state of affairs can be a source of conflict for the people left behind.
Myths About Estate Planning
Many people find estate planning complicated because of the myths or misconceptions they hear from others who lack knowledge about estate planning laws. Thus, to clear up the confusion, below are some of the estate planning myths and the truth about them.
Myth: “I’m too young for estate planning.”
All your debts, retirement accounts, bank accounts, and personal property need to go somewhere upon your death. While it’s common to put off estate planning when you’ve just reached a legal age, keep in mind that it’d be better to start creating a plan as soon as possible so that it becomes way more manageable for your loved ones to handle and receive your assets in case of an inadvertent passing.
Accidents can happen anytime. And if you feel you’re young, healthy, and invincible, you might be wrong. Death can be caused by stress, accidents, and other environmental factors. This can happen to anyone—at whatever age. Therefore, it’s best to be prepared, even while still young. Besides, you can always update the terms of your estate plan if your plans and preferences have changed.
Myth: “A revocable trust avoids creditors.”
Although a revocable living trust is a tool that provides many excellent benefits, it’s not a tool that you can use to hide your assets, avoid lawsuits, or keep away from your creditors. The reason for that is, you remain in complete control of and access to the assets you put into a revocable trust.
Myth: “Estate planning is only for the rich people.”
Estate planning is for everyone. And regardless of the number of assets, these come with specific duties and responsibilities that don’t simply end when you perish. Having an estate plan is a way of ensuring that your finances are adequately taken care of if you pass on or become incapacitated.
Estate planning is not all about the money. You might want to have specific instructions about a disabled child you have or your beloved pets. An estate plan can include detailed directions of how you want them cared for.
Even your end-of-life process can be detailed in an estate plan. People succumb to debilitating diseases all the time. You can sign a Do-Not-Resuscitate (DNR) order and indicate in your estate plan if you don’t want to be revived under certain conditions. This is especially important if you don’t want your family to be burdened by the huge costs of life-sustaining medical treatments.
Myth: “If I have a will, I don’t need to worry about probate.”
Although a will is an excellent foundation for your estate plan, it’s a typical myth that your loved ones can avoid probate proceedings by simply presenting a will. In reality, a will is a legal document designed for the probate court to authenticate.
When Is The Best Time To Start Estate Planning?
Ideally, at the age of 18, you’d become responsible for your healthcare, finances, and the execution of power of attorney. Although there’s no pressure regarding estate planning when anyone turns 18, many financial advisors recommend everyone to start an estate plan as soon as they become legal adults.
In addition, there are a few life situations wherein you’d need to prioritize your estate planning regardless of your age. Notably, estate planning is a must when you create a savings account, purchase a home or a different type of property, combine assets with your partner, travel for long periods, and when you have your first child and after each succeeding one.
Furthermore, prioritizing an estate plan is also necessary when you need to update it after a divorce, ensuring your grandchildren are well-taken care of when it comes to the inheritance of money or assets.
Why Is Estate Planning Essential For Everyone?
Many people delay estate planning due to several reasons. For instance, they think they don’t need it because they’re not old enough and don’t own enough assets. Also, they believe estate planning is complicated and costly, and they don’t know where to begin or who can help them with it. But keep in mind that people of all ages can experience illnesses and accidents. Hence, having a good estate plan is essential for everyone.
One of the reasons estate planning is necessary is that it gives you an enormous sense of satisfaction when you complete it. It’s because by creating an estate plan, you’re able to manage your assets carefully and ensure that you have something to provide to your loved ones after your passing.
With an estate plan, you can choose who receives your assets with the help of an estate planning attorney. Therefore, you’ll avoid unwanted inheritors, considering that the state will determine who will be your beneficiaries when you die without a will.
On top of that, estate planning also helps you avoid the cost and time of probate by completing and transferring assets to a living trust. Probate can be time-consuming due to the court-authorized process of validating your will, estimating the worth of your estate, settling any unpaid bills and taxes, and distributing your existing assets to whomever the court deems to be the rightful inheritors.
It’s also worth noting that the Probate Court will appoint a guardian or conservator who will take care of your minor children upon your death if you’re without a surviving partner. But the good news is that, with the provisions in your will, you can indicate a guardian who you’d want to look after your children when you die.
Furthermore, an estate plan is essential to avoid family disputes and make tough times more manageable. Specifying in your revocable trust how you want your assets allocated upon your death can prevent time-consuming and costly family fights over the distribution of your resources as determined by the court.
How To Create A Comprehensive Estate Plan?
Find An Estate Planning Attorney
Hiring a skilled estate planning attorney should be on top of mind, given that estate planning is a complex and time-consuming duty. A professional attorney can help you draft a well-created estate plan. In addition to that, they’ll guide you through the proper steps, analyze your family situation, and assist you through the complexities of the process.
After hiring a seasoned attorney, you need to determine your net worth by making a complete list of your total assets and debts. Once the list is ready, the next thing you’ll do is add in your assets, including investments, personal property, bank accounts, retirement plan, cash value of any insurance policies, and so on. From that, you’ll need to subtract the debts or liabilities, including personal loans, mortgages, credit card balance, and so forth. Doing this calculation will help your attorney determine whether your estate is liable for federal taxes.
Determine If You Need Living Trust
After calculating your net worth, the next thing you’ll do is to determine whether you need to set up a revocable living trust in addition to a will. And you can work this process out with the help of your estate planning attorney. They’ll assist you in weighing the advantages and disadvantages of utilizing a revocable living trust based on your situation.
Consider A Financial Power Of Attorney
A financial power of attorney is a document that permits someone you trust to handle your business, finances, and any property-related matters if you’re no longer able to do so for some reason. Thus, this document empowers the authorized person to make financial decisions and conduct real estate matters immediately in your behalf. With that in mind, this document can also help avoid family disputes over financial transactions.
Choose Your Beneficiaries
After developing your estate plan, you’ll need to ensure that you adequately name all of the beneficiaries you want to include in your will and trust. Also, by naming a beneficiary for your bank and retirement accounts, you’ll ensure that those funds automatically gets transferred to the designated person upon your passing.
Assuming that your family knows what to do with your estate is a big mistake. To make sure your personal possessions don’t go to the wrong person, naming your beneficiaries is crucial. This also helps avoid confusion and future contentions that could just prolong probate.
Choosing the right people as your fiduciaries is crucial to ensure the contentment of your beneficiaries. Simply put, all of the money that you spend on estate planning won’t go wasted when you select the best-qualified beneficiaries. Also, keep in mind that you can choose various people or institutions that can work together to do the financial and medical management.
Organize Your Files And Documents
Apart from accomplishing legal matters, estate planning is also about making the life of your loved ones and agents easier. Hence, one of the best ways to do that is by organizing and keeping your estate information—like relevant papers and digital documents—accessible to the executor. Doing so can save a significant amount of dollars in managing legal, accounting, and management-related matters.
Notably, there are five relevant documents you should prepare: your last will, advanced medical directive, power of attorney, life insurance policy, and letter of instruction.
Ultimately, knowing you have adequately prepared your estate plan will give you and your loved one’s peace of mind. Although it might be a daunting task or can easily be ignored because it demands planning for your death, a solid estate plan can make things less complicated for you and your loved ones before and after your passing.