Rest assured that every member of your family will get only what you want to give them. If you’re working hard to build up your fortune and acquire a large portfolio of valuable assets, it’s natural to think about protecting it from all uncertainties life brings. However, what you may think is a reasonable protective measure and what the law states as a required action upon your assets in certain life events, often largely differs. Instead of risking to find it out, hire an estate planning lawyer and rest assured your assets will be taken care of as you want to and no other way.
Estate Planning Definition
Everything you own in terms of real estate, assets, debts, personal belongings, pensions, life insurances and other forms of assets, comprise your estate. The procedure of defining, notarizing and sealing with signature and stamp your desire of what should happen to your estate after your death, is known as estate planning.
Estate planning is different than a simple estate will, and that’s where its huge importance comes from. A will is a simple legal document that only expresses the decedent’s intention for burial and to whom he/she wants to leave money. The will here acts as a probate, which with a judge’s permission allows money to be transferred from the decedent’s account to the beneficiaries account. However, that also creates an opportunity for third party relatives to contest the will. Also, a judge can misinterpret the will and that can tie the assets in court for years.
That’s why this measure is also known as estate planning asset protection, because instead of leaving it to luck and common sense, you know exactly what will happen to your belongings after you’re no longer present to protect and manage them.
Why Estate Planning is so Important?
There are many reasons why estate planning is important, and we’ll emphasize the ones we think are most essential to be considered by everyone.
- Eliminates the possibility of your assets ending up in non-intended beneficiaries – the most obvious of reasons. You know your family members individually and personally, and you know who can do what with the assets they’d inherit from you. A judge doesn’t know that, which is why you don’t want someone else to rule who will get ownership over your belongings after you’re gone. With a proper estate will, you’ll rest assured that your assets will be transferred to whom you want them to be.
Bottom line is that you can’t be sure if a judge will do the right thing with your assets, whether that’s a second home, a stock portfolio, valuable art pieces or just an amount of money in the bank.
- Protects heirs from overpaying in taxes – Remember how we said estate planning is also known as asset protection? Well, besides asset protection, estate planning is designed to protect your heirs as well. Without an estate plan, the amount of money the heirs will have to pay for taxes can be huge. But with a plan, you can significantly reduce your federal and state taxes or your state inheritance taxes.
- Assigning guardians for young children – in such dynamic world, you want to always be properly prepared for the worst. If you have young children, you want to make sure they’re properly taken care of in the event of yours or both parents death. Assigning guardians for your children under 18 allows you to have control over who will take care of your children and the manner of taking care of, as per your approval.
- Eliminate the inevitable family mess when you’re gone – It’s the same in every family; without a proper estate plan, everybody believes they’re entitled to everything. Or at least to a very large portion of what you worked so hard for. And in reality, you’re the only one who should say who is entitled to what and how much. So, instead of breaking the family peace, keep it fair and square: get an estate will which can’t be argued against, and give everyone deserving their fair part.
There are many estate planning forms according to the state you live in and what you’re trying to achieve with them. Finding them and filling them out on your own is possible, but not so advisable. After all, these are legal documents that concern your assets and the last you want to happen is a mistake that can cost you more than hiring an estate planning attorney.
We can categorize all estate planning tools in three groups:
- Basic Will – there’s no standard look of the basic will, simply because state laws vary largely in this matter and also, everyone has their own goal to achieve with the will. You can always contact us for a consultation on all your will-writing concerns.
- Health care power of attorney – this is a document that grants a person of your choice, the right to make decisions for your health on your behalf in the event of your inability to make or communicate them on your own. Basically, your health care agent or representative gets the right to decide on your health if you’re unable to do it. This may include severe medical conditions which include managing life support measures, which is why you want to think very carefully about appointing your health representative.
- Living Will – the living will form allows you to make a decision about your medical treatment and care before the need for any of it arises. If you become unable to communicate your wishes and desires concerning your medical situation, you can have a living will which directs the proper personnel on what is your desire. These legal documents differ in all 50 states, and are part of the advanced estate planning practice, which is why we advise you to contact an estate planning lawyer to have your will reviewed and checked, or drafted entirely if you decide to have one.
Strategies for Planning your Estate
Many people make a huge mistake thinking that estate planning is only for the extremely wealthy people. They assume that you need to have millions in assets in order to start paying tax money to your state, and that’s why they don’t concern themselves much. But, they’re wrong.
What many people fail to understand is that there’s a huge step up in basis on inherited assets and the income taxes. How investment property and second homes are valued after death and how taxes are levied against traditional IRAs and 401(k)s when inherited by someone other than a spouse differs largely. Plus, there’s the state that will also ask for their piece of the pie.
Judging by the complexity of these financial and legal matters, it’s highly recommended to consult an accountant and your personal estate planning attorney to better understand the step up in basis for property.
Meanwhile, here are 5 most common estate planning strategies that you can discuss with your lawyer:
- Have a will – without a will, your estate will be divided in probate court leaving your beneficiaries with huge bills to pay.
- Set up a trust – trusts allows you to protect your money if you think your heirs won’t be wise with them. Trusts offer a lot of tax benefits. When the trust is irrevocable, the money no longer belong to you, and as such can’t be subject to estate tax.
- Get Roth Accounts – convert your retirement account into Roth accounts that have tax-free money distributions.
- Gift your money while still alive – you can gift up to $14000 per person, per year. That way your estate value will reduce and so will the taxes.
- Check your beneficiaries – if you don’t appoint beneficiaries for your assets, your estate will get divided by a probate court and you won’t know who got what and how much.
Estate Planning Checklist
Make sure your estate planning documents are all well-prepared on time. Here’s what the checklist should include:
- Estate plan – the estate plan is your starting point, and as such should be very comprehensive. This means it should cover what will happen to you and your assets in both death and disability As such, the estate plan includes: wills/trusts, durable power of attorney, beneficiary designations, letter of intent, health care power of attorney, guardianship designations. All these documents have their legal power, but what is more important is the wording in them, which is why we recommend you consult with an estate planning lawyer.
- Plan for your asset ownership – you want to have all assets that have a title document to se setup for easy transfer to a co-owner immediately after your death. In most cases, this is the spouse.
- Make sure your debts are covered with insurance – in the event of our death, all your burial expenses as well as proper care for your loved ones can be covered through life insurance, car or home ownership insurance policies which you should plan on acquiring well in advance.
Costs for hiring an Estate Planning attorney
How much will it cost you to have your assets secured and take care of after your death depends largely in the state you live in and on your particular desires and wishes. However, having a personal estate planning lawyer who will guide you through this process and will make sure everything is done properly, is a worthy investment. For more information, we invite you to contact us and schedule your informative meeting with our estate planning lawyers.
What does an estate attorney do?
Estate attorneys help outline the distribution of assets and properties after a person’s death. They’re bar certified estate lawyers, specialized in estate planning and as such help people draft legal documents such as will and trusts and guide them through the legal procedures for asset division and management. They also may engage in devising ways for people to reduce taxes or fees that may be imposed on a property.
How to find an estate planning attorney?
Your assets and property are important and valuable to you, so you want someone with experience, skills and morals to take care of this matter. Make sure the lawyer you choose for yourself is clear and precise in his/her communication, doesn’t hide anything from you and has your best interest in mind.