Getting an estate plan is hardly the type of thing that tops the list of the average American. While some think the process is too expensive, others are yet to get around what it involves. Most people believe that working with attorneys and drafting legal documents will be stressful and time-consuming.
But you can save yourself lots of time even now if you understand how estate planning works. What’s more, creating an estate plan is one of the best gifts you can give your loved ones; it not only ensures your wishes are followed to the letter but can save them lots of time, stress, disputes, and even potential legal battles in future. There is nothing better you can do for your family than seeking legal counsel to protect the assets you have worked all your life to acquire.
Here are a few estate planning essentials that can help you protect the interests of your loved ones, and your legacy.
What is an Estate?
In the eyes of the law, an estate refers to the net worth of an individual. This includes your bank accounts, car, personal property, real estate, and any assets in your name. It also includes any licenses or rights you have, such as your social media accounts or a song you wrote. But an estate includes more than just the things you own; your debts are not left out. Any debts or mortgage you incurred will be taken care of by your estate, while your beneficiaries inherit what is left.
What is Estate Planning?
Estate planning simply refers to asset distribution. It is a plan that describes how you want your assets and responsibilities to be gifted to your heirs if you are incapacitated or pass away. The goal here is to ensure your heirs inherit your assets in a cost-effective and stress-free manner.
Estate planning also sets up a platform that allows you to tweak your decisions to fit changing tides and situations. You can also include your healthcare decisions inside the estate plan. For instance, some persons may abide by certain religious beliefs that affect how they are resuscitated or may want to completely avoid certain medications for personal reasons. Your estate plan is the perfect storage space for these issues, as it will eliminate disagreements and conflicts among your loved ones when you are incapacitated or pass away.
What Makes Up an Estate Plan?
An estate plan consists of several essential documents, each having its unique importance. Here are the documents that may make up your estate plan:
- A Living Will
This Will lets you decide the type of care you want to receive if you are incapacitated and can’t make decisions yourself. For instance, if there are any medications or healthcare procedures you wish to accept or reject, a Living Will is the best place to note those.
- A Last Will
This Will lets you decide who inherits your assets, name a guardian for your children if both parents pass away before they turn 18, and name an executor who would carry out your wishes. The Last Will and Testament is the most important part of an estate plan.
- Powers of Attorney
In addition to planning for your asset distribution, it is important that you make arrangements for what should happen if you are unable to make decisions independently. Power of attorney documents may include a financial power of attorney which lets you choose a trusted person to handle your finances and a healthcare power of attorney which lets you choose someone to make healthcare decisions on your behalf if you are unable to communicate your wishes.
- Trusts
A trust allows you to determine exactly how your asset distribution will look like after your death. This means your heirs will inherit what you want them to, without any hassle. You can also use it to set aside money for certain people or organizations. A trust can help you minimize taxes, avoid the complex probate process, and name the person who will take care of your minor children after your death.
Take Note of Estate Tax Laws in Your State
The United States federal estate tax is imposed on assets that are in excess of $11.4 million as of 2019. But about one in four states have estate taxes, though this is usually valued below the exemption amount of the federal government. So, while estate planning will help you minimize estate and inheritance taxes, it is important that you find out if estate taxes are charged in your state so you can factor this into your will.
Secure Your Estate Planning Documents
Once you have created your estate plan, you must organize all the documents in one place. Ensure the original documents are stored in a safe place, such as a fireproof safe or a safe-deposit box at home, that can be accessed by your attorney and estate’s executor. It is also important your attorney has copies of the documents in case you lose the originals. You may also consider saving the documents in a digital/electronic space. You can also pay to have the original documents held at the Probate Court.
Review Your Plan Regularly
As changes occur in life over time, this will likely affect your estate plan and any beneficiaries. Life events such as marriage, divorce, retirement, or even changing financial circumstances can affect your estate plans. As you review and update your plan, ensure the beneficiaries are also current for investments like bank accounts, life insurance policies, and retirement plans. The law often changes, and you should have your documents reviewed every five years to make sure they are current.
Final Thoughts
Estate planning involves more than just divvying up your assets after your death. It also means ensuring your loved ones and other beneficiaries are cared for and have access to your assets following your incapacity – whether temporarily or permanently.
About the Author: Roxane Kaye, has been practicing law since 2002. She is admitted to practice law in Michigan state courts and before the Federal Bankruptcy Court of Eastern Michigan, Southern Division, as well as the Federal District Court of the Eastern District of Michigan. Roxane covers cities such as Burton, MI, Flint, MI, Fenton, MI, Beecher, MI, Lapeer, MI, Waterford, MI, Auburn Hills, MI, Pontiac, MI, Howell, MI, Owosso, MI, Wixom, MI, Rochester, MI, Rochester Hills, MI, Novi, MI, and South Lyon, MI.
You may contact Roxane below:
Roxane M. Kaye Kaye Law Office, PLLC
8161 S Saginaw St
Grand Blanc, MI 48439
