The Essentials of Estate Planning

The Essentials of Estate Planning
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When many people think of a will, they think about not only their life’s work and assets, but also death, burdens, dividing the estate, family, grief, and they begin to feel incredibly anxious over the task. Fortunately, estate law attorneys can make the process of planning your will, filing and following all proper protocols for dividing the estate, and navigating the process of dividing your estate easier. However, these estate law attorneys aren’t always cheap. Fortunately, they cannot charge until after the process of probate is finished. Though the process will be complex in a number of ways, being able to provide a solid will and understand the basics of estate law and probate is essential and must be researched in your state in order to ease the burden once you pass on. Making a will does not have to be left until your last days here on Earth, and it can prove to be an essential tool for family processing your estate, your death, and your life.

Why It’s Important to Create a Will

As mentioned, many people, especially in the younger generation, choose to leave a will to the last minute. In fact, in a survey conducted in 2017 found that more than half of American adults do not have a will. Though 81% of American citizens over the age of 72 are prepared to have their estate divided, only 60% of those aged 53 to 71 are prepared.

Though anxiety can be a major reason adults choose not to prepare wills, the benefits of creating a will are staggering. The top three reasons that clients begin the lawful process of estate planning are to avoid probate, as reported by 59% of people, to minimize discord and inner turmoil among beneficiaries, as reported by 57% of people, and finally to protect children from mismanaging their inheritances, as reported by 39% of people.

The Not So Scary Probate Process

Probate is a lengthy process that is described by lawyers as akin to assigning a family member to attend various DMV appointments for weeks, months, and sometimes even years if the estate is large enough. This probate process is what those who write a will want to avoid, but even with a solid will, probate is still a possibility. Though this may seem grim, with an ironclad will, probate doesn’t have to be a lengthy and strenuous process, and understanding what probate is and stopping the fear of it can help immensely to ease the anxiety and encourage the making of a will.

Probate is the process that a last will and testament go through in order to get approved by law in the court, pay off debts and taxes that are owed on an estate, and finally, divide assets among beneficiaries. The process begins by either a will, or if no will is present a judge in a court of law, assigning an executor, sometimes referred to as a personal representative, to ensure that the estate has paid off its debts, all assets have been found, including those in security boxes, other accounts, and other possible financial ventures to name a few, and ultimately be the person who handles the process of the dividing of the estate.

An executor is largely named in a person’s will, but a court of law can assign an executor, usually a close family relative or next of kin, if no executor is named. An executor can choose to decline the role, as it is lengthy, and though it can be a paid position, some states require a bond to be paid by the executor in order to accept the letters testamentary, or the documentation to allow them by law to act on behalf of the estate.

Through a series of interviews, investigating, possibly hiring an estate law attorney to look into all assets liable to probate, and having a property appraised, an executor will gather all possible assets to be divided. This does not include certain assets, such as trusts, or bank accounts, retirement funds, and life insurance policies that are made payable to a direct beneficiary. Having a solid will that includes all possible beneficiaries is essential to not drag-on the process of probate and to ensure the fair dividing of the estate among beneficiaries.

Paying off Debts and Taxes

Once an estate has been gathered, and all property values appraised, a court of law will look to see what debts need to be legally paid before dividing the estate. This can include past bills, such as electricity bills, property tax on properties, debts with old creditors, and so on. Fortunately, it is no law that a beneficiary has to pay back certain debts of the deceased unless he or she has co-signed for them. However, state law does sometimes require the executor to post an advertisement or notice to creditors in a newspaper announcing the death of an estate owner that allows creditors to make a claim to the money they are possibly owed.

Avoid Turmoil Among Loved Ones

For those that have a strong and solid will, and have assigned an executor that they trust by law will notify all named beneficiaries on a will, probate can take a matter of weeks before the process is finally finished and all assets are divided. Though a will is a great option in order to guide the probate process, as mentioned earlier, other options to avoid probate on at least some assets include payable-on-death accounts, such as a checking or savings account, assets put in a trust, and life insurance payouts. These are all known as nonprofitable assets.

To ensure that someone will not contest the validity of a will, ensure that you have an executor that will notify a beneficiary in order to avoid a lawsuit that can lead to more distress. As well, creating a will, trust that has a board of trustees and makes unanimous decisions on the estate, or any other form of distributing assets can save you from the headache that is an interstate estate. An interstate estate is what occurs when no will is present, and as a result, beneficiaries of a will must attend court and have the assets divided according to state law. This can prove to be difficult, lengthy, and sometimes unfair. To ensure this does not happen, write up a will as soon as possible, and continue to update it as more assets are gained. In addition, wills can outline certain conditions for an inheritance that will prevent the mismanagement of assets, and thus ensure that your legacy and hard-earned life’s work will be thrown away due to having no guidelines for spending.

Even the Young Need Wills Now

However young you are, having a will is incredibly crucial. Even if you are under the age of 40 if you do not have a will, the time to get one was yesterday. 78 percent of millennials aged 18-36 do not have a will at all according to a recent survey. The older generation, aged 37-52, are also unprepared, as 64 percent of them do not have a will either. Studies from Princeton University examining the disparities found that the biggest factors that keep a person away from making a will are the factors of age, and assets.

Everyone is going to die at some point. It is a simple fact of life, and unfortunately, for some, it is sooner than others. In young adults, the false belief that one will live forever, recover from an accident or illness, and don’t have to focus on writing a will until old age is unfortunately not true. Even those in the military that have the option of preparing life insurance plans and are at higher risk of death due to the hazard their duty exposes to them, sometimes do not change their beneficiaries, and leave it to their parents or even, in some unfortunate military law cases, to an old boyfriend or girlfriend, rather than a new wife, or new child.

The top ten reasons for death in young adults, according to the CDC in the United States, are largely preventable, or congenital, meaning that both are sometimes sudden and unavoidable. Accidents, suicide, homicide, drugs, and alcohol to name a few are all responsible for death in young adults, and when these occur, a young person might have no will that details who to leave their assets with. What’s more, when examining the estate law and learning what one wants to do with their assets, an estate law attorney can also point someone in the right direction in order to assign a power of attorney in case of sickness.

A power of attorney, a will that names beneficiaries including parents and young children, and that includes all assets however small they might be, are all things that can be taken care of, and the younger the better. Though it might be traumatic to face the possibility of death at a young age, estate law can be on your side and protect you from any problems that can arise after your death in dividing your assets. Even if one does not have a large mansion, many properties, or a significant amount of cash, dividing whatever assets you might have among family and children you leave behind can help, even, to ease some of the pain and burden of your sudden death.

Passing Down the Right Things

As mentioned above, a will can help in providing a strict and easy guideline to dividing assets. These assets that are subject to probate are properties, and the value appraised for those properties. Though over half of American homeowners over age 60 are planning to age in place, and many are modifying interiors with this in mind, keep in mind that the modern value appraised on these properties, as well as property tax when passed down, legal fees, and filing fees on top of that will be passed down to beneficiaries as well.

As well, it’s important to research the specifics of state and estate law that are relevant to your assets and beneficiaries. For example, different states have different laws for how to handle property that is given to spouses of a beneficiary. Even the definition of a child, a spouse, and even down to adopted and grandchildren can all vary widely by state law.

In addition to this, keep in mind the state law of community property, that is, property that a husband and wife own together, and how this can affect both your beneficiaries and yourself if you are an heir of an estate. An even more simple way of giving an estate to a direct beneficiary without having to navigate a heavy amount of state law is to create nonprofitable assets, such as that of IRAs and other retirement accounts.

Wills Are Essential to Planning Life

Wills are not only an integral part of an older generation, and not a right of passage for the wealthy, but can be used by everyone, at any time, to gather affairs in order and ensure that state and estate law will be on their side during the time of their death. From ensuring debts are paid to passing on precious heirlooms and properties, creating generational wealth, ensuring it is not wasted, and subject to additional fees, and most importantly, for easing the burden of death on a loved one, a will is an essential part of life at any age.

Contact an estate law attorney, or reach out to a financial advisor in order to begin the process of filing the necessary paperwork for estate filing. The sooner, the better.

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