Thinking about death and disability can be daunting. That is why one of the most crucial steps you can take in order to protect yourself and your loved ones is proper estate planning. A tailored estate plan will give you peace-of-mind in addition to helping your loved ones avoid the costly and time-consuming probate court process. It will also help avoid the frustration involved in managing the affairs of those who become incapacitated or pass away. Take control of your affairs and your future today.
Planning for your Incapacity
If you become incapacitated, you will not be able to manage your own financial affairs. Many are under the mistaken impression that one’s spouse or adult children can automatically take over for them if they become incapacitated. The truth is that in order for others to be able to manage your finances, they must petition a court to declare you legally incompetent (unless you had a durable power of attorney for finances in place before you became incapacitated). This court process can be lengthy, costly and stressful. Even if the court appoints the person you would have chosen, the individual may have to come back to the court every year and show how he or she is spending and investing each and every penny. The court will also require the individual to file documents with the court updating the court about the incapacitated person's status, living arrangements, and health.
If you want your family member(s) or a particular person to be able to immediately take over for you, it’s essential that you work with the right estate planning attorney to draft the proper legal documents to designate a person, or persons, that you trust with the authority to access your bank accounts, pay your bills, administer your taxes, enter into agreements, and make financial decisions that you would have made had you not become incapacitated. Many people mistakenly think that a simple will can effectively protect you in the event that you become incapacitated, but the truth is that a will does not take effect until you pass away.
In addition to planning for the financial aspect of your affairs during incapacity, it is critical that you establish a plan for your medical care. The law allows you to appoint someone you trust - for example, a family member or close friend to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself. You can do this by using a durable power of attorney for health care where you designate the person to make such decisions on your behalf.
Avoiding the Probate Court Process
The overwhelming thought about probate court is that if you can avoid it, you should. If you do not have estate planning documents, your assets get divided according to the laws of the state that you live in. This means that state law will dictate who gets what of your assets and how much they get, through the probate court process. If you leave your estate assets to your loved ones using a will, you will not avoid probate and everything you own will pass through probate court. The process can be expensive, time-consuming and it will be open to the public. The probate court is in control of the process until the estate has been settled and distributed. During this process, it is not unusual for the probate courts to freeze assets for weeks or even months while trying to determine the proper disposition of the estate, making it difficult for your family to pay for living expenses. If you are married and have children, you want to make certain that your surviving family has immediate access to cash to pay for living expenses while your estate is being settled. With proper planning, your assets can pass on to your loved ones without undergoing probate, in a manner that is quick, private, and inexpensive in the long-run. One of the ways to avoid probate court is with the use of a revocable living trust.
Estate Planning for Minor and Adult Children
It is important that your estate plan address issues regarding the upbringing of your children. If your children are young, you may want to consider implementing a plan that will allow your surviving spouse to devote more attention to your children, without the burden of work obligations. You may also want to ensure that your spouse has the proper resources available to in order to help the care of your minor children. Important estate planning discussions with your attorney should involve matters involving nominating a guardian to watch over your minor children in a situation where both you and your spouse pass away leaving minor children. You should also have discussions choosing a trustee or personal representative to carry out your estate planning objectives in order to make sure that your estate assets get disposed of properly and in accordance with your wishes.
Another important item of discussion that involves your beneficiaries, including adult beneficiaries should involve whether you would your estate assets to be distributed to your beneficiaries outright (i.e. after estate administration expenses have been paid for on your behalf), at certain ages (i.e. one-third to be given at age 25, and the remaining two-thirds to be given at age 35), to stay in a lifetime trust to help avoid your beneficiaries' creditors and to be distributed to your beneficiaries for their health, education, maintenance, or support, or any way that you prefer (with the advice of your attorney). Most clients prefer the lifetime trust method of distribution for extra creditor protection.
Estate Taxes and Proper Planning
This is where proper estate planning becomes vital. There are several techniques and strategies that can help avoid or minimize estate taxes. Find out whether your estate could be subject to estate taxes and ask your attorney what you can do about eliminating or reducing them.
Bequests to Charities and other Organizations
Do you want leave estate assets to a particular charity or organization? A proper estate plan can help you accomplish that.
Ultimately, a well-thought-out estate plan should provide for your loved ones in an effective and efficient manner by avoiding guardianship during your lifetime, probate court upon your passing, estate taxes and unnecessary delays. You should consult a qualified estate planning attorney to review your family and financial situation, your goals and explain the various options available to you. Once your estate plan is in place, you will have peace of mind knowing that you have provided for yourself and your family.