There’s no negating the importance of establishing an estate plan. Whether your net worth is gargantuan or whether you’re living paycheck to paycheck, it’s critical that you have at least a basic estate plan in place. Doing so will ensure that your financial goals are met after you pass away. This kind of financial planning can provide payment of your debts, education or trust funds for your children, and much more.
Estate planning has the primary purpose to determine what you want done with your ‘estate’ after you die. In addition to that, effective estate planning can offer the following benefits:
• Ensure that you remain in control of the distribution of your assets
• Protect any wealth from expensive estate taxes
• Ensure that your family is taken care of after you die
• Avoid the complicated and expensive probate process
• Outline the care you want and oversight of your affairs should you become incapacitated
• Allow you to create special trusts for loved ones or organizations you care about
Below are some guidelines on how to get started.
Components of an Estate Plan
Your estate plan will include a will, copies of all financial documents, a durable power of attorney, and a health care proxy.
Factors to Consider
Before you can really start to lay out your plan, you’ll have a lot of thinking to do. Some of these factors will vary a bit depending on how large and complex your estate is, and what stage of life you are in. For example, if you are young enough to have small children, you must determine who would care for and raise your children if you should die. If you are married, you and your spouse must discuss how assets should be distributed if one of you should die. You’ll have to decide who will receive your life insurance when you pass away. You’ll also have to consider who should care for you if you become unable to care for yourself. This part of the process involves much discussion with loved ones and much tough decision-making.
Get Your Plan Together
After having gathered copies of all financial documents including life insurance policies, all banks and investment account information, all debt information, you can reasonably estimate how much you’ll have left over to leave to loved one. List all assets and liabilities. Your liabilities will have to paid at death. What’s left over is what will be distributed between your heirs. Write your will according to the amount you estimate will be left over. In addition to leaving money to loved ones, you can make contributions to charitable organizations. You can also lay out conditions for receiving the cash. Once you have established your will and basic estate plan, you’re ready to move on to the next step.
Formalizing Your Estate Plan
Once you feel comfortable with the will you have put together, make sure to notarize the documents with at least two witnesses present. Keep in mind that no beneficiary should serve as a witness. Next, you’ll want to name an executor who will be in charge of making sure that your final wishes are met. Make sure the person you name as executor is willing to do the job and is someone you trust. In many cases, attorneys or other impartial parties are named as executors.
Review and Re-review Your Plan
After you’ve drawn up and formalized an estate plan, you might think you’re all set. Unfortunately, that’s not the case. Unless you know that you will be passing in a short amount of time, it is important to go back and review your estate plan every few years. Many factors can change over the years which might require some basic adjustments to your estate plan. An Estate plan is essentially several legal documents brought together to guide nominated persons through decisions you have made about the end of your life. In specific terms, a Will, a Living Will and a Power of Attorney all need to be incorporated into the Estate plan. Trust documents may also be included in cases where they are needed.
The most detailed document is likely to be your Will. How you would like your assets to be distributed and details of specific gifts you wish to make, should all be mentioned in here. It should also contain details about how you wish to make provision for your funeral expenses and Inheritance Tax payment. Children under 18 of course need to be provided for, both financially and in terms of appointing guardians. In this instance, the creation of an additional Trust document may be appropriate.
Living Wills are a newer but valuable addition to the Estate plan. In here, should you become unable to think or communicate clearly at some point in the future, you are able to specify how you would prefer to be looked after and if you would choose for medical staff to prolong your life, should you suffer from a terminal illness or severe injury. Not something any of us enjoy thinking about but nevertheless a very important issue for your loved ones.
Finally, Power of Attorney. Again this document relates to your actual lifetime rather than post-death, and refers to a scenario where you are unable to make decisions for yourself. The Power of Attorney will dedicate a named individual to organize all of your financial and legal dealings. At first glance, it appears that Estate planning is a long and complicated process, dealing with many issues none of us care to dwell on. However, an experienced probate practitioner and Will Writer will be able to guide you through the whole process relatively quickly, leaving no stone unturned. They will also be able to advise you on the most efficient ways of preparing for your death and dividing your Estate, to minimize Inheritance Tax and other related costs.
The Basic Documents of Estate Planning and Beyond
The third step in your do it yourself financial plan is estate planning. Estate planning is thought about as wills, trusts, and gifts, etc. Not anymore. No one wants to think of sickness, old age, and death, yet all of us will experience that at some point, and the most important element of a person’s legacy is not money but passing along values and life lessons. Yes, the basic documents of an estate plan which are needed to build wealth are a will, durable power of attorney for financial care and durable power of attorney for health care. But now people want so much more. They want to know how the final wishes and preserved memories of the individual will be left behind. Here is the new softer side of estate planning:
Ethical Wills-more people are using this type of will not just to distribute assets but to also put their values and beliefs on paper. Even if you are not the best writer, you can find outlines and examples on the web to get you started on what memories, beliefs, values, or life lessons you would like to leave behind.
Durable Power of Attorney for Financial Care is a document that gives someone the authority to take over your financial matters upon your disability or incapacity. Make sure that the individual you choose is aware of his or her duties. Don’t surprise people with this responsibility. Talk to them first to see if they are open to being appointed for these duties.
Durable Power of Attorney for Health Care is a document that gives someone the authority to make medical decisions for you upon your disability or incapacity. 85% of most DNRs (do not resuscitate) are not honored. Again, make sure the individual you choose knows of his/her obligation to see that your wishes are honored. Some of the new advanced medical directives like the Five Wishes available at Aging with Dignity offer a more detailed medical directive which is easy to understand and use.
Passing along “values and life lessons” was overwhelmingly considered (by over 75 percent) the most important element of a person’s legacy according to a recent study. Don’t wait to execute these documents under duress. To build wealth, you have to preserve what you accumulate over the years. Plan your legacy today for the protection of your assets and your family.
Estate Planning Lawyers Are the Components That Make Up an Ideal Estate Plan
The main reason we might seek out estate planning lawyers in our area is to establish a last will and testament. This document serves a variety of functions. First off, it allows you to appoint a guardian for your children upon your death. Second, it protects your business and allows the company to be transferred to a co-owner or heir. The next, and perhaps the most important reason, is that it determines who will receive your assets whether it is a family member or a charity.
What Happens If You Die Without a Will?
It is best to ensure you have a last will before you pass on. If not, the state will have the rights to your assets and will choose who receives them. While it may vary by state, the typical distribution channel depends upon your marital status and children when you die.
Your parents are the first in line to receive your assets. If they are deceased, then they will be handed over to your siblings. In the event you have children, the assets will be split evenly between them.
This is where the distribution process can become quite complex. Ideally, the surviving spouse would inherit one-third to one-half of your assets, and the rest will be divided up evenly amongst the children. If no children are present, the surviving spouse can inherit everything, or will have to split the money with the deceased’s parents or siblings. Leaving it up to the state to distribute your assets can lead to family conflict and, in some extreme cases, lawsuits filed. Estate planning lawyers can assist you in creating a last will and testament that will make your death an easier transition for your loved ones.
There Is More to Estate Planning Than You Might Think
However, a common misconception about estate planning is that the last will and testament are the only part of the plan when in actuality it is one part of the estate plan. Estate planning lawyers can also establish a living will, living trust, durable power of attorney, and power of attorney for you.
This document will inform your family members of your wishes in the event of an irreversible coma or terminal illness. Therefore, it establishes whether you want certain medical treatment to be withdrawn to allow for a natural passing.
In a trust, certain assets can be set aside for individuals outside the last will and testament. These assets will then be transferred over during your lifetime and will not have to undergo the probate process. The probate process can be a lengthy one since it requires the executor named in the will to validate the will to the court, appraise the deceased’s property, and pay off remaining debt and taxes. A living trust is beneficial because it can be used to manage your estate both before and after your death and can be used to avoid probate for items that would have to go through this process. It is a legal arrangement that is set up between a person, law firm, bank, or an institution and a beneficiary. The person or institution appointed by you to manage the items in the trust is called the trustee, and they hold the legal title to the property. You can choose to have more than one beneficiary, and people often do choose more than one person if they have reason to do so. In many cases, people choose to have one set of beneficiaries during their life—usually themselves and another set for after their death—usually their children—who will benefit from it after they have passed. As long as it is well-drafted, your trust is something that can continue to be effective even after your death. There are two main benefits of setting up a trust:
• The first is that it is a way to avoid probate with your items that are not included in your will. You have the option of establishing a revocable living trust that will terminate upon your death and will pass on immediately to your beneficiaries. This process saves a lot of time and money for your beneficiaries.
• The second major benefit is that some trusts come with tax advantages for the donor, yourself, and the beneficiaries that you choose. The trust can act as a life insurance or credit shelter trust. These types of trusts can be used to protect the property of the donor from creditors in order to qualify for Medicaid. Whereas wills are legal documents, trusts act as private documents that are only available to individuals that have a direct interest and need to be in the know in terms of what is contained in the trust and the distribution of assets.
Durable Power of Attorney
Similar to a living will, but not quite. The durable power of attorney allows you to appoint someone to make medical decisions on your behalf when you are unable. However, this type of power covers all health-care related decisions, not just the terminal ones that the former covers.
Power of Attorney
This allows you to appoint someone to handle all legal and business matters in the event you become incapacitated. Therefore, this person can write checks and sign documents for you. Understanding these aspects of what estate planning lawyers do will ensure your wishes are fulfilled.
Free Initial Consultation with Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506