Planning an estate is a subject that no one is in a big hurry to discuss. It seems like one of those things that ought to work itself out and not be our concern. The reality, unfortunately, is that avoiding the process of making a robust estate plan can leave your loved ones in an extremely difficult situation. End of life can come with significant expenses from medical bills, funeral costs, outstanding debt, and other sources. By getting all of our ducks in a row we can enable our loved ones to deal with these expenses, and other challenges, with minimal burden placed on their shoulders.
Execute a Last Will & Testament
A last will is typically the place to start in planning an estate. In this document, you will name a trusted individual as your executor. This person will then work with the court to properly distribute your property to your heirs. While your heirs will still be stuck dealing with probate court, the process will be significantly streamlined by putting a will in place. Unless something is contested, the court will stick to your instruction on how you want things distributed.
Explore the Option of a Living Trust
If you think it would be preferable to avoid probate court altogether, you might consider a living trust. These documents tend to be more expensive to draft and maintain than a will. That being said they are well worth the trouble for certain circumstances. Particularly in the case of high net worth individuals or when business ownership will be a part of your estate, a living trust becomes a must. If you feel like this might be relevant to your situation, we highly recommend speaking to an estate planning attorney to explore your options.
File a Beneficiary Deed for Some Property
Probate laws differ from state to state, so it’s always a good idea to speak to an attorney regarding the rules in your specific area. For example, a beneficiary deed in Colorado is applicable to any real property that you would like transferred upon death. This is the case in most other states in the U.S. as well. These tend to be fantastic options for things like houses, which can become unruly during the probate process under certain conditions.
Ensure Proper Medical Decision Making
It is not uncommon for individuals to find themselves in a situation where they become incapable of making medical decisions for themselves. To avoid having decisions made by someone we’ve never met, it’s best to name a trusted party to handle these situations. By drafting a medical directive, a trusted individual is named to ensure your wishes are considered first. If you don’t have a medical directive in place currently, you may want to delay your next African safari until you can get one in place!
Keep Your Financial Bases Covered
Similar to medical decision making, financial decision making can become a major hurdle when a person becomes incapacitated. This is best handled by assigning power of attorney to someone you trust. In most scenarios, this will also be who you name in your medical directive as well as the executor of your will. When drafting a power of attorney, it is important that you ensure the power of attorney is what’s known as “durable.” A durable power of attorney simply means that the power of attorney remains in place in the event that the principal becomes incapacitated. Today, this is often assumed to be the case. However, we highly recommend consulting with an attorney just to be sure. Laws can vary widely from state to state.
Name a Beneficiary Wherever Possible
Many types of financial accounts carry the ability to name a “payable-on-death” beneficiary. These include bank accounts, insurance policies, investment accounts and more. The upside to this ability is that the value held within the account will completely bypass the probate process and go straight into the hands of your beneficiary. This is a fantastic way to help your heirs handle the obligations that they will be facing with a minimal amount of undue stress.
Investigate Estate Taxes
For some situations, your estate can be heavily taxed by the U.S. Government. These taxes are aimed mostly at high net-worth individuals. A good attorney can sit down with you and optimize your estate to minimize the impact of these taxes. If you feel like these could apply to you, it is again recommended that you speak to a competent attorney.
Plan Your Estate or the State Will Plan it for You
As you can see, there is a lot to consider when building an estate plan. No two situations are alike, except for one thing; if you don’t make a plan the state will do it for you. Obviously, this will almost always be sub-optimal and likely to place undue stress on loved ones who are already grieving a loss. A little effort can go a long way in this department, we would encourage you to speak with an estate planning attorney today to investigate your options