Proper estate planning is so important in order to be control of your finances, so your family doesn’t have to deal with unforeseen frustrations if you become disabled or pass away. None of us want to think about our death or becoming disabled. Estate planning is one of most important things you can do to protect yourself, your assets, and your family. Most people think if they become incapacitated, their spouse, adult children or family will be allowed to take over their financial affairs. However, a court will have to declare you legally incompetent, which can be costly and take a long time. If the court does allow the person you want to manage your affairs, that person may be required to appear in court every year to give an account of how they are investing or spending every cent of your money. If you want your family or loved ones to bypass all this hassle, you must designate a person/persons in proper legal form so they will be able to take over your affairs immediately if you are disabled or pass away. If you properly plan, they will be able to pay bills, withdraw money from your accounts, refinance your home, etc. A will is not enforced until you die, and a power of attorney may be insufficient.
Not only do you need to plan for your financial affairs, but also for your medical care. In the event you lose the ability to make sound decisions for yourself, you can appoint someone to be able to make those decisions for you. You can create a durable power of attorney for health care where you designate a person to make these decisions. You should also have a living will which lets everyone know your preferred medical treatments, such as what steps to take if you become unconscious or terminally ill.
If your will designates beneficiaries to take over your estate, everything you own will have to go through probate. The court will be in charge of everything, and it can be a very lengthy and costly ordeal. If you have children and a spouse who needs access to your accounts to pay for expenses, you want to make sure they have the ability to get access. Probate courts can freeze all your accounts for weeks or months until everything is settled. This can cause undue stress on your loved ones. Estate planning can alleviate this hassle and your estate can be passed on to your beneficiaries quickly.
If you have minor children, you will want to address specifics regarding them in your estate planning. From who you would want to raise your children as well as who will be responsible for the financial responsibility of raising your children, all need to be laid out in your estate plan. If you are married, you will want to address who you would want to raise your children in the event both of you passed away at the same time. If these situations are not addressed in an estate plan, the court would get to make the decision for the children and their guardian may be put under strict guidelines and yearly accounting to the court, that you may deem as unnecessary.
Be aware of death taxes. Your estate may incur federal estate tax as well as state taxes on your estate or inheritance taxes. There are strategies to reduce or eliminate death taxes, but you need to consult an attorney to make sure these strategies are in place.
Do you want to donate any of your assets to a charity or cause when you pass away? You can provide for that sort of giving in your estate plan. You can set up your planned giving so that you receive income for life, earn higher investment yield, or reduce capital gains or estate taxes.
A thorough estate plan should provide an effective and efficient avenue to avoid guardianship during your lifetime, probate at death, estate taxes, and lengthy delays. Contact an experienced estate planning attorney regarding your wishes for your estate so you can provide a detailed plan to protect your assets, your family & loved ones. Preparing your estate plan will give you peace of mind.