Simply put, estate planning is about providing a blueprint and authority to help your loved ones deal with your incapacity or death. Proper estate planning can spare your loved ones from dealing with the costs, frustrations, and delays in managing your affairs. It also puts you in charge of your finances now, before disaster strikes, and helps you to maintain control and direction afterwards.
Estate planning can be designed to achieve multiple goals at the same time.
Incapacity Planning
When incapacitated, you are not able to manage your financial affairs. Nor can you make medical decisions for yourself. Contrary to popular belief, a spouse, adult child, or other loved one cannot automatically step in. Many times, it requires a court order declaring you legally incompetent before they can fully act on your behalf. Even if the court appoints the person you would, that person may have their every act scrutinized and questioned.
Planning for incapacity can provide the necessary authority for the person you choose to act on your behalf without court intervention. This avoids the needless costs and delays during a crucial time. Further, you will be able to leave detailed instructions about your views on healthcare or financial management to ensure that your health and wealth are managed properly.
Avoid Probate
When you pass, everything you personally own will need to pass through probate. The probate court retains jurisdiction and control over the property until probate is complete and property is finally delivered to your heirs. The process can be costly, time-consuming, and frustrating, especially for loved ones who are still dealing with losing you. The probate court may freeze assets for months or years while the final disposition is resolved. This can mean your loved ones can be left to financially struggle throughout the process.
Estate plans can be created to minimize probate or avoid it altogether. Using the correct estate planning tools can allow you to pass on property outside of the probate process and outside the view of the probate court.
Planning for Taxes
The tax most associated with your estate at death is the federal estate tax. Whether any tax is owed will depend upon the size of your estate and how your estate is structured. There may also be a separate state tax depending upon your residence and location of your property at the time of death. There are many strategies that can be used to avoid estate taxes but the process must be started early and be completed prior to death.
In addition to estate taxes, income taxes and property taxes need to be considered as part of the estate plan. Gifting property to your heirs could result in a large income tax bill when the property is sold. Additionally, increases in property taxes when transferred to heirs can often be avoided by engaging in professional estate planning.
Planning for Minor Children
You may want to consider planning that takes into account the needs of your minor children. You will want to consider a plan that permits the surviving spouse to spend more time raising the children. Under a worst case scenario, where both you and your spouse die in a common incident or within a short period of time, you will want a plan that manages your estate for the benefit of your children. Your estate can still benefit your children long after your death.
In addition, you will have the opportunity to name a guardian for your children until they reach the age of majority. The guardian will be someone whose values you share and trust to properly care for your children. Naming a guardian can avoid conflict between family members who each believe they know best how to raise your children.
Planning for Pets
Sadly, many pets end up uncared for when the owner becomes incapacitated or passes. An estate plan that takes pets into consideration can ensure that your faithful companion will not be ignored or left to the pound.
Charitable Gifts
Do you have a particular benefit or cause that you are passionate about? Your estate plan can provide for charitable gifts during your lifetime and after death. Depending on how your charitable gifting program is structured, you could receive a lifetime of income for yourself and your family while providing a charitable donation after death.
These are just some of the goals and benefits of having a well-crafted estate plan. You should consult a qualified estate planning attorney to discuss your financial and health situation, your goals, and your options. Once you have your estate plan in place, you will have the peace of mind that comes with knowing that your health, wealth, and family are protected.
Contact Yeager Law with any questions, comments, or concerns.