Many people think estate planning is only for the wealthy, but everyone needs a plan. An estate plan consists of several legal documents that make sure your assets pass smoothly to your loved ones after you die or become incapacitated.
It can also help you avoid family disputes and potential taxes. Here are a few things to consider when creating your estate plan. For more information you can visit Ogden Utah Personal Injury Lawyer.
- Know What You Want
Estate Planning is the process of making it clear how you want your assets managed and distributed after your death or incapacitation. Often, this involves creating a will, trust, and other legal documents. However, it also encompasses establishing a power of attorney, medical directives, and appointing a trustee to oversee your investments, bank accounts, and other financial assets.
Knowing what you want is important because your family will have to guess if you don’t make your wishes known. This can lead to conflict and litigation. In addition, it’s important to consider your state’s laws regarding probate and estate taxes. These can significantly impact how your assets are distributed to heirs.
Start by inventorying your tangible assets, including everything from jewelry and valuables to vehicles and even a home or other real estate. You should also include information about your financial assets, such as your brokerage accounts and other bank accounts, the deeds to any properties you own, and titles for any cars you may have. You should also compile a list of any legal or financial documents you have, including mortgages, insurance policies, powers of attorney, and the names and contact information of any professional advisors you work with.
Once you have a good idea of what you own, think about who should inherit each item. For example, leave something of high value to a loved one and give less important items to friends or charity organizations. It’s also important to consider whether you have specific heirs that might cause conflicts or other issues with your plan.
Once you have your plan in place, it’s important to review it regularly. This is especially true whenever you have a major life event, such as the birth of a child, the death of a loved one, or a divorce. It’s also a good idea to meet your financial and legal professionals annually to ensure your plan is up-to-date and aligned with your goals. At Gentreo, we can help you with this by preparing an affordable, easy-to-understand Estate Plan that will ensure your wishes are carried out after your death or incapacitation.
- Create a Will
When people hear the word “estate,” they may think of mansions and sprawling grounds. But the truth is that everyone has an estate, and an estate plan can help anyone protect their belongings and ensure their wishes are carried out after they die.
A big part of estate planning involves choosing beneficiaries. Beneficiaries are the people who will receive your assets in your will and who will make financial or healthcare decisions for you if you can’t speak for yourself. It’s important to choose carefully because your choices will impact your loved ones’ futures.
Having alternate (contingent) beneficiaries is also a good idea if your first choice doesn’t survive you. You can name anyone as a beneficiary, including family members, friends, charities, organizations, or even trusts and entities like businesses. It would be best to discuss your beneficiaries with family and friends who your decisions will impact. If possible, you should include minor children in this conversation so they know who you want to be their guardian.
This is also a great time to discuss your values and what you hope to accomplish with your assets. For instance, if you’re religious, you might want to use some of your assets to support a church or charity. This could be a way to leave a lasting legacy and impact future generations.
When you create your will, reviewing it periodically and after major life events is a good idea. For example, if your assets have changed or you have new family members, you’ll want to update your will accordingly. You should also make multiple copies, store them safely, and let your loved ones and trusted advisors know where to find them.
Many people put off making a will because they don’t think they own enough or have the time, it sounds expensive or confusing, or they’re afraid their families will fight over their inheritance. But that kind of conflict can lead to heirs losing out on valuable assets or your family going through the costly process of the probate court to determine who gets what.
- Create a Trust
Trust is essential if you want your hard-earned assets to be passed on in a certain way. Estate planning is not just for the wealthy, and even a simple plan can help ensure that your loved ones are taken care of after your death or in the event of incapacitation.
A trust allows you to pass on your property by transferring ownership to a trustee, who manages the assets to benefit others (called beneficiaries). You can set up a revocable or irrevocable trust. The former is flexible and lets you change the terms during your lifetime, while the latter cannot. Both types of trusts can help minimize taxes, avoid probate, and make it easier for your family to access your assets.
When you create a trust, you will also need to name a trustee who will oversee and carry out the instructions in your trust after your death. This is an important role, and choosing someone you can trust to fulfill your wishes on time is best. It is often a good idea to have more than one trustee if a conflict arises or one cannot act.
Having a trust can also help you avoid probate, a time-consuming legal process that can be expensive. In addition, a trust can help keep your affairs private and out of the public record.
You will also need to decide how the assets in your trust will be distributed. This is an important consideration, especially if you have young children. For example, consider setting aside some money for them to be used for college tuition or other purposes. Consider setting aside funds for a specific charity or cause.
If you have significant assets, you should consult an estate attorney to discuss the benefits of a trust. They can also help you determine the appropriate amount to include in your trust and what assets should be included. Including life insurance policies, retirement accounts, and bank accounts makes sense.
- Make an Inventory of Your Assets
Taking an inventory of assets is one of the most important steps in estate planning. While it may be tedious, ensuring that all of a person’s assets are documented and located so they can be distributed according to their wishes after death is critical. Going through file cabinets, desk drawers, and safe deposit boxes can help find assets that may have been overlooked. This step should also include a list of debts, such as mortgages and credit card accounts.
It’s important to list all of a person’s property, including real estate, such as homes and cars; personal belongings, such as jewelry and furniture; financial accounts, such as checking, savings, and investment accounts; and life insurance policies. It’s also a good idea to consider any significant debts, such as mortgages or lines of credit, that must be paid upon death.
If a person’s assets are not properly planned, family members might argue over what to do with them or be subjected to taxes that could eat up a portion of the estate’s value. An estate plan can prevent this by naming who handles a person’s finances and assets should they become incapacitated or die. It can also designate who will receive a person’s possessions and how much they should get.
Estate planning can be complicated, so it’s always a good idea to consult an attorney if you aren’t sure where to begin or how to implement your wishes. Having an attorney by your side can help you avoid costly mistakes that can be made when you attempt to do things on your own.
It’s important to review your estate plan regularly. Experts recommend that people check their plans every 3 – 5 years or whenever there is a major change to their situation, such as a birth, marriage, divorce, the death of someone included in their estate plan, or a child reaching adulthood. It’s also a good idea for people to create an estate plan when they are younger, as they can make changes throughout their lifetime that will impact their loved ones.