Important Things to Know About Estate Planning
Tragedy hits you when you least expect it. There is no easy way to accept this reality, but the sooner you do, the sooner you’ll be able to devise a coping strategy.
Estate planning helps your loved ones navigate the unknown waters they will inevitably experience after your passing. It is an opportunity to take control of your legacy and ensure that your family members are taken care of and that your assets are distributed according to your wishes. With estate planning, you can help them navigate the legal and financial complexities that may arise, providing them with peace of mind, comfort, and a sense of security.
Table of Contents
- 1 How to settle an estate?
- 2 Are Americans Aware of the Importance of Estate Planning?
- 3 The Essential Elements for Estate Planning
- 4 Where to Start?
- 5 Conclusion
How to settle an estate?
When a family experiences the probate procedure for the first time, they frequently find themselves confused, wondering what it means and, more significantly, whether they need to deal with it.
After an owner passes, the legal process that is carried out to settle their estate is called probate. It is a court-mandated procedure that confirms the validity of a will and starts the process of transferring assets and property to legitimate heirs and beneficiaries and paying back any remaining liabilities of the deceased owner. If no executor or administrator is named in the will, one is appointed by the court.
Probate proceedings typically focus on a will’s existence, authenticity, and validity and can be initiated with or without one.
Trust and Will understands your pain of losing a loved one and promises to walk you through the entire probate process so you don’t have to worry during an already difficult time.
Are Americans Aware of the Importance of Estate Planning?
A survey from caring.com found that over 67% of Americans do not have their estate plans sorted. So in a way, they are obliviously leaving their fate and the fate of their estate up to others. Their reasons ranged from not getting around to it yet (40%) to thinking it was too expensive (13%). Others simply stated they did not have enough possessions to pass on to their children (33%) or did not know how to get a will in the first place (12%).
Not having a will or estate planning means that if you are left incapacitated in an accident or due to a disease, you lose control over the type of medical care you receive. And if you fall prey to the inevitability of death, your assets, no matter how many or how little, might not get distributed among your loved ones the way you want.
The valuable lesson to learn here is that estate planning is a necessary process that you ought to go through to avoid any such unfortunate outcome.
The Essential Elements for Estate Planning
Here are the ten essential elements for estate planning:
A Guardianship Designation for Minors
If your kids are still young, you must plan how the life insurance payouts you leave will be handled for their benefit. The easiest way is to place money in a trust in your children’s names. Furthermore, designate a trusted family member or friend to look after your children until they are 18.
Your non-trust, non-beneficiary assets will be divided according to the terms of your will. These may include your house, vehicle, bank accounts, or other personal belongings.
Executor or Administrator
Deciding who will execute your wishes is advisable when you draught your will. A friend or relative can administer a straightforward estate with the assistance of an estate lawyer. However, a more complicated estate could need professional management.
A trust enables you to transfer assets to beneficiaries without subjecting them to the probate procedure. It gives a next-of-kin control over your affairs in the event of your incapacitation.
Medical Power of Attorney or Advance Directive
If you are unable to make medical choices for yourself, this designates a person to do so on your behalf. It gives instructions to the person making these decisions concerning what you would want in a particular situation; for instance, you may have a DNR.
Financial Power of Attorney
This allows someone of your choice to handle your financial affairs after a doctor declares you incapacitated. You can either make it all-inclusive or restrict it to a few specific functions.
This is the analysis of an investment or a financial plan in a way that allows your loved ones to pay the lowest possible. According to the current law, Individuals can pass up to a certain amount of cash and other property without being subject to the present Federal estate tax system. Although some jurisdictions have lower limits, the federal estate tax returns are only applied to estates valued at at least $11.7 million in 2021.
Beneficiary designations are used to transfer ownership of retirement accounts, pension benefits, insurance, and brokerage accounts.
Letter of Intent
Simply put, a letter of intent is a document given to your executor or beneficiary. Its purpose is to specify what should happen to a specific asset in the event that you are not around. Special wishes or requests concerning your funeral may also be included.
Where to Start?
Estate planning can be scary because it forces you to confront your mortality and consider what will happen to your assets and loved ones after you pass away. It can also be confusing, complicated, and time-consuming, and you might not know where to begin or may be unsure about the legal and financial implications of different options. To get you going, here are some important tasks to check off your list as you proceed.
- Itemize your physical inventory
- Follow with virtual assets
- Come up with a debts list
- Make a list of memberships
- Make multiple copies of the lists
- Go over your retirement accounts frequently
- Don’t forget to update your insurance
- Select a suitable estate executor
- Draft a will
- Review your documents regularly
- Share a copy of your will with the executor
- Visit an estate attorney
- Visit a financial planner
- Use college funding accounts to your benefit
Your worst enemy is procrastination. Even though no one likes to think about passing away, poor planning or none at all can result in family conflicts, assets falling into the wrong hands, protracted legal issues, and excessive estate tax payments. Estate planning can also prevent any potential disputes or disagreements that may arise after you are gone.
Additionally, by having a plan in place and discussing your wishes with loved ones and professionals, you can ensure that your end-of-life care aligns with your values and that your loved ones will not be burdened with difficult decisions without guidance.
So take control before it’s too late.