Estate planning tools have practical applications for everyone, not just the wealthy. Each has benefits but they can also work together to establish a comprehensive estate plan. This preparation becomes more important as we pass milestones like marriage, family building, purchasing a home, and retirement.
A qualified, experienced estate planning attorney can explain the tools involved in this critical planning process and the importance of each. Creating a comprehensive estate plan is a process that involves ongoing communication with your attorney. Choose one who welcomes questions and can discuss each to your satisfaction.
6 Things to Know About Estate Planning
One of the primary benefits of estate planning is avoiding the time and expense of probate court. When a person dies without a will or estate plan, the probate court assigns an executor and oversees the process. This can take 6-12 months and cost thousands of dollars, depending upon the complexity of the estate. In addition, probate court proceedings are public record, so anyone can access the information. When you work with an estate planning attorney, probate can be avoided for most assets, your family members receive their distribution faster, it’s private, and court costs are saved.
To start, gather your personal documents. You’ll need information on your liabilities, assets, properties, insurance policies, family members, and even your healthcare providers.
Will. At a minimum, all adults should have a will that enumerates intended heirs and provides information about the division of assets, including possessions they want to distribute to their loved ones. Because a will is delivered to the local probate court, an attorney can craft it to avoid divulging unnecessary personal information.
Power of Attorney. Naming a surrogate to handle business matters, to sell property on your behalf, or to handle your healthcare decisions requires a POA. These expire upon your death but should specify if they are durable, which is effective even when you are incapacitated. The correct version of a POA is recognized and respected by banks, healthcare providers, and the recorder of deeds.
Living (Revocable) Trust. This tool helps protect your assets from probate court. When assigned to a living trust, you are trustee and your investment accounts can still be accessed and managed, to support your expenses. However, creditors can still seek payment from them. Upon your death the trust is administered by a successor trustee until your descendants receive the proceeds. Accurately retitling assets and creating the trust is the work of an estate planning attorney.
Irrevocable Trust. Trusts that are irrevocable require removing assets from the use of the owner, which provides specific benefits to heirs. The accounts and assets in an irrevocable trust, including real estate, are out of reach of creditors (except when fraud is proven), including for Medicaid expenses, after the federal five year “look back” period. In exchange for that protection, the assets are trust-owned and administered by appointed trustees.
Property deed. Changing the deed to property to name a partner as co-owner under Joint Tenancy with Right of Survivorship allows title to the property to pass directly to that person upon your death. The benefit of this change is bypassing probate, but the risk is that part ownership of a property can expose it to creditors seeking funds from your co-owner.
Beneficiary designations. By assigning things like insurance policies and investment assets to specific beneficiaries they pass directly to that person upon your death. This also avoids the delays and expenses of probate.
Coordinating these tools with your estate attorney’s expertise is invaluable: it’s critical that all are complementary rather than conflicting. Making sure each is up to date, signed, witnessed, and recorded (where necessary) ensures that the comprehensive estate plan works as desired.
Professional Results, Peace of Mind
When you’re ready to discuss estate planning, consult with Lam Law Firm for a professional evaluation of your assets and an honest appraisal of your expectations. Knowing that your loved ones will be cared for after your death will bring peace of mind. Start now by establishing a comprehensive plan for your estate.
