Estate planning involves putting together a plan for handling your assets, accounts and health care matters in the event you become disabled or pass away. The choices that loved ones are faced with during these events are very difficult. It is a very emotional time, and the burden of making important decisions is daunting. By planning ahead, you are doing what you can to minimize the hardship on friends and family members.
You do not need to be wealthy or elderly in order to have an estate plan in place. Everyone should have at least some level of estate planning. Estate planning is a means of ensuring that your assets are protected and distributed in a manner that meets with your desires. Most families would prefer to give as much of their assets to their family and loved ones, rather than pay expensive estate taxes, probate fees and costly attorney’s fees to settle their estate.
People often put off doing estate planning because they are uncomfortable thinking about their own mortality. Although estate planning can be emotionally difficult, it is important to understand that if you do not plan for the way your estate will be distributed, someone else will, typically a court judge.
Estate Planning will address the following questions:
- Who will receive the assets in your estate upon your passing?
- Who will raise your children upon your passing?
- At what age will your heirs receive distribution of your estate?
- Who will make financial decisions for you if you are incapacitated?
- Who will make medical decisions for you if you are incapacitated?
- Would you want to remain on life support if you were in an irreversible coma or persistent vegetative state?
If your assets are in excess of the Federal Estate Tax Exemption during the year in which you pass away, federal estate tax will be owed unless there is another exemption or portability. Each person receives the right to pass on an amount equal to the Federal Estate Tax Exemption of $5,450,000 in 2016. An individual with appropriate estate planning can receive this credit and pass on a total of $5,450,000 in 2016, estate tax free. Note that the exemption amount changes frequently so it is important to plan in the event that this tax may be applicable to you.
When creating the documents that will make up your estate plan, you’ll want to make sure that these documents will be effective under both state and federal law. Every situation is different, and Asset Law Firm, PLLC will work with you to create a customized estate plan.
Contact Asset Law Firm, PLLC for help with your estate planning needs. Evening and weekend appointments available.
Why Create an Estate Plan?
There are various goals that can be accomplished with estate planning:
- Passing along your personal property, real property and assets.
- Providing for the care and financial needs of your children if you should pass away while they are still minors.
- Providing for pet care after you pass away.
- Avoid costly and time-consuming probate procedures.
- Disinherit heirs whom you don’t want to receive a share of the estate.
- Prepare for decisions needed for health care and finances in the event you aren’t able to make these decisions for yourself.
There are many mechanisms that can help you meet your goals. These include wills, living trusts, co-ownership, transfer-on death designations and beneficiary designations. Contact Asset Law Firm, PLLC to talk about your estate planning goals. Evening and weekend appointments available.
How to Get Started on Your Estate Plan
You begin the process of estate planning by looking at what makes up your estate. Doing this helps you get an idea of what you’ll have to make arrangements for and can also predict your potential estate tax liability. Basically all of the assets you own make up your “estate.” This includes bank accounts, money market and brokerage accounts, certificates of deposit, your house and any other real property, cars and recreational vehicles, IRAs and retirement plans, and sometimes life insurance death benefits.
Another preliminary consideration is thinking of who you want your beneficiaries to be. If your beneficiaries are minor children, have special needs or have issues that may make them unable to make sound financial decisions, there are some mechanisms that can help in these situations. You should also think about some specific objectives that you might have, including care for pets, disinheriting beneficiaries or spreading the distribution of your assets over time.
Contact Asset Law Firm, PLLC for a helpful worksheet that will help you break down your assets and list your beneficiaries.
When to Update Your Estate Plan
When major life events happen, that is the time to update your estate planning. Changes include getting married, having a child, getting divorced and moving to a new state. Note that you may not be able to transfer property if in the middle of getting a divorce. You might also need to update your estate plan when you want to make changes to the heirs, trustees or beneficiaries of your estate. If you acquire or dispose of major assets, then it might also be time to make changes to your estate plan.
Trusts can be updated using either an amendment or restatement. Trust amendment is used for simple changes like adding or removing a beneficiary or changing a successor trustee. If you need to make more substantial or complicated changes, you ought to either make a trust restatement or create a new trust. A restatement includes old and new provisions and is a complete trust document. By effectively continuing an original trust with a trust restatement, you have the advantage of not having to retitle the trust property. A living trust can be revoked any time in a written and signed document.