How Will Your Assets Be Distributed?

Estate Planning is typically the largest stewardship decision you’ll ever make. After working a lifetime to accumulate your estate, how will your assets be distributed? Without proper estate planning, often assets will end up going to the IRS, or worse, cause major disputes between family and loved ones. 

A proper estate plan can provide you with peace of mind; knowing that your needs and wishes will be carried out as desired. 

Estate planning can also help reduce taxes that would be owed upon death so that you can instead leave your assets to loved ones and the causes and charities you hold dear. 

What Is Estate Planning?

Simply put, estate planning is planning ahead for what you desire to happen to your finances in the event of incapacitation or death. Estate planning covers not only the transfer of property at death but also end-of-life healthcare choices and a variety of other matters that are often linked with tax planning.

Your estate will include assets (such as life insurance, pensions, real estate, cars, personal belongings) as well as debts (mortgages, credit cards, car loans, etc).  

The primary document most often associated with this process is your will, but can also involve the use of trusts, powers of attorney, living wills, and other strategies.   

What’s Involved in Estate Planning

The first and most difficult step in estate planning is determining who you want to leave your assets to, in what form, and over what time period.  We have plenty of experience in guiding our clients through these decisions and can help you with this step if needed.

Once you know how you want your estate distributed, the two most basic steps in estate planning involve writing a will and updating beneficiary designations. Other major estate planning tasks include:

    • Naming a guardian for living dependents
    • Naming a trustee and executor of the estate to oversee the assets and terms of the will
    • Establishing a gifting plan to distribute assets to qualified charities to reduce the taxable estate
    • Setting up durable power of attorney (POA) to direct other assets and investments
    • Limiting estate taxes by utilizing trust accounts
    • Setting up funeral arrangements
    • Setting up a healthcare power of attorney (HPOA) to make any end-of-life healthcare decisions on your behalf
    • Creating/updating beneficiaries on plans such as life insurance, IRAs and 401(k)s

Why Is Estate Planning Important?

Most people have no idea how big their estate actually is, or what will happen when they die.  No one really enjoys thinking about their death, so we tend to put off this critical area of planning.

We all have reasons for needing to plan our estate, whether it’s providing for a spouse and children, preserving family wealth, funding children’s and/or grandchildren’s education, or leaving a legacy through charitable bequests.

The good news is that no matter what your desires, a proper estate plan can help you carry them out.  The only requirement is that you put the plan in place while you’re still alive!

Estate planning is not necessarily difficult, and it doesn’t have to be complicated, but it does have to be done before you need it.  You only get to pass down your assets once, so make sure you have a plan in place!

What About Probate?

Probate is the process of validating a will and is done by the courts system.  Assets that pass via a will are part of your probate estate. These probate assets are subject to probate fees, are often tied up for a lengthy time, and become part of public records accessible by anyone.

There are two great solutions to help you avoid probate.  The first is through the use of beneficiary designations. Accounts that have beneficiary designations (retirement accounts, life insurance policies, accounts titled Joint With Rights of Survivorship, etc.) do not pass through your will and thus avoid probate altogether.  That’s why this is one of the two basic parts to any estate plan. Many people do not realize that you can add beneficiary designations to almost any banking or investment account and easily avoid probate on this portion of your estate.

Another great solution for avoiding probate is through the use of Revocable Living Trusts.  A revocable trust is a will substitute and will distribute your assets to heirs and charities like a will does but is not subject to probate.  This saves the hassle and costs of probate and keeps this part of your estate from being subject to public records.

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