Why You Want (And Need) an Estate Plan
Estate planning is the process of anticipating and arranging, during one’s life, for the disposal and management of his or her estate before and after that person’s death. Many people fail to recognize the importance of an estate plan and its numerous benefits. Here are a few reasons why everyone needs an estate plan:
Probate is a system filled with default rules that spell out what to do with your assets after you pass away. It is filled with a lot of complex rules that can be tough to understand without consulting with legal professionals. Probate can be a long and drawn out process, especially if you have a lot of assets to your name (real estate, automobiles, financial accounts, etc.). There are many different ways to avoid probate by estate planning, such as setting up a simple revocable trust, creating joint bank accounts, or using life insurance to direct assets. Avoiding probate will help distribute your assets more quickly with fewer headaches.
Protect the People You Care About
Generally, there are two major issues that people are concerned with when thinking about their decedents after they die. First, people are concerned with who will care for their children. Estate plans allow you to appoint someone whom you trust to be the guardian of your child. While this appointment is not a guarantee, courts strongly favor the person named as guardian in a duly-executed will or power of attorney. Second, some people may be worried that their expected heirs will not make the right decisions for a variety of reasons. To safeguard your children or other beneficiaries, using a trust and having a trustee can allow an independent person to assist you loved ones with managing their assets. There are methods to protect your children’s inheritance from a divorce or even bankruptcy.
As mentioned above, if you pass away without an estate plan your assets will go through the default probate rules. These rules often distribute your earnings to your spouse and children. In Massachusetts, if you or your spouse have a child from outside of the marriage, your estate could partially pass to your children, regardless of their age. With an estate plan are in the driver’s seat, and you will decide exactly where to distribute your money and assets in amounts of your choice. Moreover, you will have the ability to gift property to people or charities outside of your direct family members.
Many people do not realize that their estate may be subject to either federal or state estate taxes or both. A very common way to mitigate these estate taxes is by setting up a revocable living trusts. For married couples, a simple trust may be the difference between paying tens of thousands of dollars in estate taxes and paying nothing. Additionally, if you own permanent or whole-life life insurance, there are estate planning strategies that can move the entire life insurance benefit out of your taxable estate.
Most people do not realize that a will becomes a public document after you pass. The will if filed with the local probate court and is accessible to the general public. One of the key aspects of the modern estate plan is the living trust, which is a private document that is not subject to recording, publication, or filing with a court. Today a modern will looks to the trust as its primary beneficiary and this estate-plan structure allows you to keep private the people to whom you are leaving your legacy.
Different people have different estate planning goals, needs, and concerns based on a number of different factors. Everyone’s estate plan is different. Consulting with an attorney is the best way to figure out how you should structure your estate plan. The attorneys at Long, Knight, Huff-Harris, & Hagan, P.C. are experienced in the realm of trust and estate law, and we would be happy to help you navigate the process of creating an estate plan that best serves your needs.
Contact us today for more information.