Why do I need an estate plan? That is the question we often hear from clients who have assets and have not considered what should happen to those assets after they die.
It is a vitally important question to answer while you are alive and well. If you own property and want to direct what happens to your assets upon your death, you need to have an estate plan.
It’s really that simple.
Without one, the court will determine how assets will be divided through the probate procedure, which is overseen by a probate court that has jurisdiction over the estate. It involves holding hearings and a court will decide how to distribute the assets to the appropriate heirs if there is no valid will.
The decision of the probate court may not be the way you would wish for your assets to be distributed, so it is best to answer those (sometimes uncomfortable) questions today.
To Will or Not to Will
Each client has individual needs and life goals. It is our job to craft the estate plan that best fits their needs. We do that by getting to know you and your priorities.
An estate plan may start with crafting a will, a legal document that usually names the individuals who you will rely on to make financial and medical decisions when you cannot. A will can also direct who should receive which of your personal property, investments, cash, cars homes etc.
Many people think they can get a do-it-yourself will template as a cheaper solution to estate planning. But that question is, will it hold up in court? Have you thought of everything that should be in that will and do you know how best to craft a will to take advantage of tax law? The truth is, this is far too complicated an issue for you to try and go it alone to save a few dollars.
But a will is just one legal document that is considered as part of an estate plan. Understanding the law and keeping up with IRS and other financial changes is essential to gain the most tax and financial benefit from your estate.
Let’s say you have three children and a large estate made up of investments, property, a second home, and cash on hand. Upon your death, an estate plan can provide for your children, their education, the education of their children, and distribute your assets, your property, cash and investments as you have directed.
Things can change over time, so consider an estate plan something that must change with life events. Divorce, additional children, a change in values and priorities – these can all effect the planning of your estate.
Sometimes, individuals would prefer to direct their assets to their favorite charity after their passing.
Assume you have a love for ecological preservation of environmentally sensitive places, homeless animals, or even hospice which may care for you at the end of your life. It can be very rewarding to help those who have provided meaning during your life.
Our firm can help direct your assets without burdening your family with that task.
Additionally, we will make sure that your possessions are properly titled so there is no confusion at the end of life as to how they should be distributed. It can happen that several names are on a deed, or that one of those individuals has passed on, further confusing the issue if the estate plan is not updated.
We also find that insurance policies may not name the person you would want it to benefit. These need to be updated as life changes.
If you are have a limited liability company or partnerships, these too need to be incorporated into the planning.
The tax implications of distribution should also be taken into account, so your survivors do not get into trouble with the Internal Revenue Service.
Appointing an Executor
Once you have passed on, your property is of little value to you; however, it may be monumentally important to your survivors. We’ve seen dividing assets create in-fighting among family members who previously enjoyed a healthy relationship.
It is strongly advised that your estate plan name an executor to oversee the distribution process. The executor’s job begins after you have passed. This should be a person you can trust to ensure that your final wishes are carried out as stated in your will.
An estate plan should leave instructions for your end-of-life care in case you become incapacitated. Designating someone with Power of Attorney gives them the authority to name someone who will be able to make medical decisions while you are alive and cannot.
For example, there may be a dispute among your survivors about how you want to live the remainder of your life if you are in an accident.
Would you want to live on a ventilator? Is a “do-not-resuscitate” statement something you want in place under certain circumstances? Part of your end-of-life care may include a living will that specifies you be taken off of artificial life support.
Do you want to be buried or cremated? If buried, where? These are discussions that you get to make as part of your estate plan so it is not left up to chance.
Remember, none of us have any idea when the end of our lives will occur. For that reason, we strongly suggest that our younger clients have an estate plan as well, especially if they have children to provide for.
An estate plan can designate the guardianship of your minor children in the event of your death and it can specify how their financial needs will be provided for when you are no longer alive.
Having an estate plan is vitally important. Ultimately, it will avoid confusing and uncomfortable family and business situations, because it is clearly stated to be your choosing. It will be the last and perhaps the most important decision of your life.
For experienced guidance on wills and other estate planning documents, contact Haygood, Cleveland, Pierce & Thompson LLP at (334) 731-7693 to schedule an initial consultation. You may also send us a message through our online contact form.