Everything You Should Know About Estate Planning

Estate planning is the process of arranging for the disposal of one’s properties after their death. When a person passes away, the management of their property is important because it can be the cause of chaos after someone passes away. Estate planning ensures that all of a person’s property is managed well and distributed among their dependents after their death. According to Advance Capital Management, 55% of Americans pass away without estate management or a will. Estate planning can take many forms, so let’s look into this subject in more detail.

Wills

A will is an essential part of estate planning. A will helps you decide who will own what property after you have passed away. A will empowers a person when they are living to decide who will inherit what property after they’ve passed on. It also gives one the power to make other important decisions, such as choosing a guardian for their children. It ensures that there is continuity after the death of a person. It also protects the rights and affairs of loved ones after one passes away. A will is an essential document in estate planning that de-escalates tensions between interested parties after one’s death. A will can only become legally binding after one dies, and it has to go through the probate process for the property to be given to the beneficiaries.

Trusts

A trust is another important estate planning tool. A trust ensures that all property is distributed to the proper beneficiaries after one’s death. One creates a trust and transfers ownership of their property to it. The trustee then distributes the property to the listed beneficiaries as indicated. Unlike a will, a trust does not need to go through the probate process. In a trust, there can be a pour-over where the property that you didn’t indicate is handed over to the trust. One can have both a will and a trust.

The Power of Attorney

Estate planning is not complete without the power of attorney. Power of attorney gives authority to an individual to manage the property in case one becomes incapacitated. This happens in trusts. When one can no longer act on their property as willed, then the power of attorney can give a trustee the power to act on one’s behalf.

Are you interested in putting together a will? Do you need help choosing a power of attorney? Contact Woodworth & Holter, PLLP today for all of your estate planning needs.

Why Is It Important to Have a Will?

A will is a document that allows you to speak after you are dead, and one that gives instructions on how you would like your assets to be managed in your absence. It provides instructions such as how your properties will be distributed and who will take care of your underage children, i.e. those under 21 years. However, a study by Merril Lynch and Age found that 55% of all Americans are those who die without a will or estate plan.

When you die without a will in place, you leave the management of your assets in the hands of the courts who will apply the law in the distribution process. Your loved ones may stand to lose out on what you intended to be theirs because there is no guidance in the form of a will to state this. This is therefore a very important document to have in place and we look at a few reasons why.

Instruction for Your Burial Preferences

A will instructs your loved ones on how you would like to be buried. We all have a way in which we would like our bodies to be handled after we die. However, if this is not shared with our loved ones, it can cause conflict and confusion among those left behind. A will easily clarifies what the last wishes of the deceased were in that matter.

Who Inherits Your Wealth

This is a critical aspect of why a will is needed. It especially protects young children to ensure that your hard-earned wealth does not fall into the wrong hands to deny them what is rightfully theirs and that they are well provided for in your absence.

Determine Your Executor

A will allows you to select the person that you would like to be the executor of your wealth. This is especially so where there are properties and financial assets. You can select the person you trust to run your affairs and ensure that your wishes are carried out.

A will is not a nice document to have or a suggestion, but a critical part of your estate and future planning, especially when ensuring that your children and loved ones are protected even when you are gone. It reduces the level of disputes and conflicts as the instructions are clearly spelled out for everyone to understand and follow.

Why You Need To Plan For The Future Now

It happens in a single moment, and your entire future is changed forever. The passing of a loved one is never easy, even when their death is expected or imminent. Once the initial shock has passed, grieving loved ones are often left behind to deal with significant paperwork issues. In many cases, hospitals, schools, or other agencies, may demand paperwork that may be hard to obtain, and these entities might want it as soon as possible.

The ones left behind are juggling legal and financial issues alongside processing their grief and the emotional hole the loved one has left behind. One of the best things anybody can do for their loved ones is to prepare their legal and financial matters ahead of time. None of us ever really know when our final moments will be.

There are several benefits to planning for estate matters now. Suppose you have or know of others in your family that may cause trouble for those left behind. In that case, having properly drawn up paperwork will prevent disputes from arising and protect your loved ones from expensive legal battles. Suppose you know there is significant debt to be paid after the fact. In that case, you’ll want to make sure you have sufficient life insurance to cover it or your assets placed in such a way that will prevent creditors from seizing them. Over half of Americans, 55% of them, pass away without a properly executed will or estate plan.

Each state has unique rules regarding death, debt, and estate matters. These laws can have an impact on unknowing loved ones left behind. The freshness of the effect of loss will leave loved ones vulnerable to less than ethical debt collectors or others who may try to bully the loved ones into making choices without complete information. It is essential to plan your estate for all eventualities.

In addition, estate lawyers handling things now for you can also help you when your life circumstances change. Suppose you get divorced. What happens to your estate plans once this happens? Suppose you come into even more money than you did before. How should that be distributed? An attorney can walk you through these scenarios and work with you to come up with a solution.

Working with qualified estate planning attorneys can help ease your entire family’s legal and financial transition after death. They will be able to manage the situation far easier, giving you peace of mind.

Estate Planning: 5 Ways to Go About It

A common misconception is that estate planning is designed for wealthy people who own different assets. You may also think that estate planning is only about finances and designating an heir to your property. Far from that, estate planning accommodates other decisions such as appointing a guardian for your minor children, setting up the power of attorney, funeral arrangements, and organ donation decisions. Here are the different ways you can use to plan your estate.

1. Writing a Will

Will writing is common among Americans above the age of 65 with 50% having up-to-date wills. However, wills should not be viewed as the exhaustive estate planning instrument as many people take it. Your estate planning lawyer will tell you that a will is important as it details your last wishes of how you want your estate to be handled. Nonetheless, the estate planning attorney should also tell you that a valid will doesn’t exempt your estate from probate. The beneficiaries of your will can only access the assets after the probate process is complete. To avoid the lengthy and costly probate process, you should create a trust and transfer your assets into the trust when you’re still alive.

2. Revocable Trust

You want to save your dependents the time and cost of going through the probate process by utilizing an estate planning trust. Estate planning attorneys will help you to legally transfer your assets to a revocable living trust. In a revocable living trust, the assets are transferred to your listed beneficiaries although you still retain control. A revocable trust will help your dependents skip probate, but they may not escape estate taxes, especially if each beneficiary would get more than $5.45 million upon the division of the estate. If your estate isn’t worth that much, your dependents may not pay estate taxes.

3. Irrevocable Trust

On the other hand, an irrevocable trust will save your dependents large sums of money in estate taxes. This should be your go-to plan if you have a large estate. In an irrevocable trust, you transfer all your assets to your beneficiaries without retaining control over the assets. Once you set up an irrevocable trust, you transfer all the control of your assets to the trustees, and this cannot be changed. The assets in an irrevocable trust are immune to the probate process and are not part of the valuation of your estate when you pass on.

4. Appoint a Guardian for Your Minor Children

Guardianship is a crucial part of your estate planning. Not only does it guarantee the welfare of your children if you pass on, but also it safeguards your estate. We all wish to stay long enough to raise our children and grandchildren, but sometimes accidents happen. In the unfortunate event that you or your spouse are deceased when your children are still minors, estate planning allows you to appoint a close relative or friend as the guardian to your children. If you fail to appoint a guardian, the court will take over and appoint one of your relatives as a guardian even though you may not have approved of the choice when alive. You should appoint a guardian that you can trust to take care of your children and also your assets.

5. Setting up Power of Attorney

Estate planning gives you a chance to appoint someone to take charge of your financial and health decisions for you and your dependents should you become incapacitated. You may become incapacitated due to mental illness or a physical accident. Without designating power of attorney, the court will have to administer a conservatorship after a lengthy and costly process.

Regardless of the value of your estate, you should consider estate planning. Estate planning lawyers in Bismarck, ND, will help you to carefully plan for the future of your estate when you’re still alive. This will ensure the continuity of your legacy when you pass on. Even better, your dependents will move on with their lives without infighting or enduring lengthy court processes to get their inheritance.