Are you curious about estate planning? Maybe you have heard from friends, or even the media, about the need to have a Will or Trust in order to leave assets to your heirs and beneficiaries and you want to know more.
We can help you understand these estate planning concepts and more. Our philosophy is that everyone should have an estate plan that they understand and that is understood by the people they care about.
Important Estate Planning Considerations
Every estate is different and requires unique planning considerations. Here is a list of things you might want to consider when it comes to your estate:
- How much is your estate worth?
- What estate taxes will be owed after you pass away?
- Do you want your estate to avoid probate?
- Who will manage your estate after you die or become incapacitated?
- How do you want your assets managed?
- Who will make medical decisions on your behalf if you are unable to do so yourself?
- What medical care do you want and do not want to receive?
- Who do you want to receive your assets after you pass away? How do you want your assets to be received?
- At what age should your beneficiaries be entitled to a distribution from your Trust?
- Who do you want to take care of your children?
With the help of a qualified estate planning attorney, you can create an estate plan that addresses each of these concerns.
Wills vs. Trusts
Both Wills and Trusts can be used to leave assets to your heirs and beneficiaries. But, what is the difference between these two estate planning instruments?
A Will is a written document that tells the court where you want all of your assets to go when you die. Here’s how a Will works:
You express your wishes in a Will. Then after you pass away, your heirs go to probate court to have your Will validated and all of your assets accounted for and distributed as dictated by your Will.
A Will requires going to probate court, a public process, and ultimately, a judge’s approval. What’s more, it can sometimes take a year or more to finalize the entire process. Also, your heirs will probably need to pay for an attorney to assist them throughout the probate process.
If you want to avoid the time and expense of having your assets probated and your personal matters open to public scrutiny, you may want to consider passing your assets via a Trust, rather than a Will.
A Trust is a legal entity that you create to hold title to your assets and that will then be managed by a Trustee that you appoint. Typically, you will be the initial Trustee of your Trust and will have full control over your assets as long as you are alive and able.
Here’s how a Trust works:
You re-title your property in the name of the Trust and manage the Trust while you are alive. Then, upon your passing, your successor Trustee will take control.
Your Trustee will then manage the Trust assets as you see fit, or distribute them to your heirs. It’s all up to you and what you want to have happen to your assets after you pass away.
A Trust is a good estate planning option if you want to:
- Avoid the probate process;
- Dictate what happens to your estate, both when you are alive and after you pass away;
- Plan for times when you might become incapacitated or unable to manage your own affairs;
- Provide for your loved ones;
- Minimize estate taxes; and/or
- Establish a long term legacy with the assets in your estate.
Aside from a Will or a Trust, a good estate plan should also include:
- A durable power of attorney;
- A living Will, or health care directive;
- A health care power of attorney; and
- Other estate-specific planning documents.
Heirs vs. Beneficiaries
If you have been looking into estate planning, you have likely come across the terms heir and beneficiary. But, what is the difference between the two?
An heir is someone who would inherit from your estate, by law, if you left no Will behind. For example, your spouse, children, grandchildren, or other relatives. If you die “intestate”, meaning without a Will, your heirs are the people who would automatically inherit from your estate.
Beneficiaries, on the other hand, are people who are named in your Will or on other estate planning documents to inherit things from your estate. For example, the person you designate as the beneficiary of your life insurance policy or a charity that you designate to receive the balance of your investment account after you pass away.
The bottom line is that if you have a Will, it is much better for a person to be your beneficiary than simply your heir. This is because a beneficiary is assured to inherit from your estate, while an heir is not.
Contact an Experienced Estate Planning Attorney
The only way to dictate what happens to your assets after you pass away is through proper estate planning. An experienced estate planning attorney can help you set up an estate plan that specifically outlines who will receive what from your estate after you pass away and how.
Working with an experienced attorney can help you create an estate plan. For help getting started with your estate plan, contact us or sign up below for one of our events.