No one likes thinking about death, but sooner or later, we all need to make plans for the inevitable. Some people assume that their possessions will automatically transfer to their spouse or other family members if they die. Unfortunately, this is not always the case. Estate planning offers some control over what happens to your assets in the event of your death, enabling you to ensure the right assets go to the right people.
What is Estate Planning?
Estate planning encompasses a range of measures that individuals can take to ensure their assets are distributed appropriately in the event of their death or incapacitation. Writing a will that specifies who gets what after someone dies is an example of estate planning. However, while most people are familiar with the concept of leaving a will, estate planning can involve a wide range of other activities. Most estate planning is conducted with the advice and supervision of an attorney. There are also estate planning advisers who aren’t lawyers but can advise clients on the financial side of estate planning.
Examples of common estate planning practices include:
- Deciding how assets should be preserved, managed, and distributed after the owner’s death or incapacitation and which assets should go where.
- Writing a will.
- Setting up trusts to hold or manage assets on behalf of beneficiaries.
- Making charitable donations and taking other measures to limit the estate’s tax liability.
- Naming beneficiaries and executors.
- Making funeral arrangements.
Why do you need a Lawyer to Assist with Estate Planning?
Technically, you don’t have to have a lawyer to assist you with estate planning. However, unless you happen to have the qualifications yourself, working with a lawyer is strongly recommended. Estate planning can be simple or complex, depending on the estate in question, but it is always a serious undertaking. If there are any problems with estate plans, they often won’t become apparent until they are executed after the estate owner’s death.
While many of the strategies and instruments available for estate planning are the same across the US, each state has its own rules regarding who can and can’t serve as a personal representative. In cases where the beneficiaries of an estate reside or the nominated personal representative of the deceased are in different states, things can become more complicated. To ensure that everything proceeds smoothly, you should hire an experienced lawyer with estate planning experience. Estate planning lawyers will know the relevant state laws inside and out.
Working with an attorney to formulate a plan for your assets after your death will give you and your beneficiaries peace of mind that everything is in place and your plans are indisputable. They will work with you to ensure all the necessary documentation is available, utilize the most suitable financial instruments to achieve your objectives, and ensure the wording and procedures you use will stand up in court.
But perhaps the most compelling reason to make your plans under the supervision of a lawyer is that you will minimize unnecessary expenditures. If there are any issues with your estate plan or the documents you submit, your beneficiaries could end up drowning in legal fees.
Wills and Estate Planning
A will is a legal document that specifies how you want your assets to be distributed after you pass on. If you die without a will in place, your assets will most likely be distributed according to local state laws or left in the hands of a judge. As well as indicating how you want to distribute your assets, a will can also specify your wishes regarding the care of minor children and other similar issues.
It is a common misconception that only those with significant assets need to bother with a will. Even if you have minimal assets to distribute after your death, there are many reasons why leaving a will is a good idea. For example, you can ensure that any assets you leave behind are distributed to the right people and, just as importantly, kept out of the hands of those you don’t wish to pass them on to. Wills are also crucial for settling issues regarding childcare.
Wills are a core component of any estate planning strategy, but not all wills are created equal. Some types of will, such as oral wills expressed in front of witnesses, aren’t widely recognized by US courts. The most effective kind of will is called a testamentary will. Testamentary wills are the type that most people are familiar with; the testator puts their wishes in writing, and witnesses sign the document. If you produce a testamentary will under the supervision of an attorney, it will be very difficult for anyone to challenge it in court after you die successfully.
Wills are commonly used alongside trusts to distribute assets to beneficiaries. By utilizing both mechanisms, you can set conditions for the distribution of your assets while minimizing your beneficiaries’ tax liabilities. Each trust usually only holds specific assets, such as a piece of property. They are frequently used to hold or manage assets on behalf of underage beneficiaries. Once the recipient is able to manage the assets themselves, they can take possession of the trust and the associated assets.
How Estate Planning Can Provide for Those with Special Needs
Estate planning is always important, but it takes on an even greater significance when a child with special needs is involved. Estate planning isn’t just about dividing financial assets; it’s also an opportunity for parents to ensure their children receive the appropriate type of care when they’re gone.
If the child is likely to receive government benefits, their parents can establish a “special needs trust” for them as part of their estate planning. These trusts need to be drafted carefully to ensure they don’t affect the child’s eligibility for government benefits. The idea is that while the government benefits cover the recipient’s basic needs, the trust provides funds for other trips and activities.
What Happens When Someone Dies Without a Will or Estate Planning?
If someone dies without a will, they are said to have died “intestate.” This can create numerous problems for the deceased’s heirs. Without a will to specify how an estate should be divided, the estate goes into probate. Probate is a legal process in which a probate court determines who inherits what according to state law. The probate process can take anywhere from a few months to a few years to resolve, depending on the complexity of the estate.
In most cases, intestate succession laws are used to determine who inherits an estate in probate. These laws differ from state to state, but most states will split the estate between the deceased’s spouse and children if there are any. If the deceased is single and has no children, the state will determine which relatives should inherit their assets.
In most states, only certain people can inherit assets under intestate laws. These are usually limited to spouses and registered domestic partners and blood relatives.
Estate planning is vital for anyone who wants some degree of control over the distribution of their assets after they die. Dying intestate can create significant stress and tension among surviving heirs and spouses. You should always work with an estate planning lawyer to ensure that estate planning is thorough and robust.