Studies show that only one in three Americans have an estate plan. It’s unclear why there is a low intake. Could it be because many people don’t know about it, or they are scared of it as it’s seen as a way to prepare for death?
An estate plan helps shield your family from worry, sadness, and emotional damage. This means that if you want to leave your family at peace, you should work with your estate planning attorney and have an estate plan in place.
If you have been on the fence about getting the plan, here are a few things you should know about it:
An estate plan will cover your decisions in life and death.
Your estate plan specifies what you want to happen to your property once you are gone. Who receives what and when? Do you wish to leave something for charity? Who will be the executor in charge of paying your final bills and dispersing your remaining assets?
You should have all this in your estate plan.
When you are unable to make decisions due to a serious medical condition, an estate plan can help you express your preferences. You delegate decision-making authority to a trusted family member or acquaintance.
You can provide specific instructions, such as whether you want to be an organ donor or decline treatment when on life support with no hope of recovery.
To avoid surprises, you should let everyone in your plan know about their roles once you are gone.
The plan ensures that the government doesn’t make decisions for you
Each state has rules governing what happens when someone dies or becomes incompetent without an estate plan. Without a plan, you lose the opportunity to make your voice heard.
The individual who ultimately makes your healthcare and financial decisions may not be the one you like.
Inheritance laws favor a nuclear family structure, which means that money typically goes first to your spouse and children. If you want to leave something to charity, friends, or family members, you’ll need an estate plan.
With an estate plan, you can specify what you want done once you are gone. You also specify what you want anyone you love, including charities, to receive in your demise.
A good estate plan speeds up the inheritance.
When you die, the state courts analyze your will and distribute your assets to the specified heirs via a procedure known as probate. If you do not have an estate plan and your family members battle over the inheritance, they may spend everything on legal fees.
Even if probate goes smoothly, it can take many months or even years.
Accounts with beneficiary designations bypass probate and go directly to the named recipients. To protect your loved ones, set up transfer-on-death (TOD) instructions on bank accounts, brokerage accounts, automobile titles, and home titles.
Another alternative is to create a revocable trust. You deposit property into the trust fund but can withdraw it as needed. When you die, the trust transfers the property to the beneficiaries you specify without going through probate.
An estate plan saves taxes for your heirs.
The estate tax is a tax levied on major property transfers upon death. In 2024, the federal exemption is $13.61 million per person, which is not a concern for the majority of people. However, 17 states and the District of Columbia impose some type of estate or inheritance tax with far lower thresholds.
Estate taxes begin at $1 million in Oregon and $2 million in Massachusetts. You can reduce these taxes by planning ahead of time, such as making larger gifts or setting up trust funds.
It is too late once you have passed away, so protect your loved ones from taxes while you are still alive.
A trust fund gives you control even in your demise.
A trust fund is a legal entity that manages property for the benefit of another. You can create a trust fund to govern how your money and property are dispersed after you die.
For example, if you are concerned about your 18-year-old grandson’s ability to manage a six-figure inheritance, you might place the money in a trust fund with a delayed distribution clause, requiring that your grandson get the money until after turning 25 or finishing college.
You get to protect your pets and online accounts.
If you have a cat, dog, or other animal in your family, make sure to mention your wishes for them in your estate plan. Who will take over the pet: a friend or the local humane society? ”
You can even set up a pet trust specifically to help the other person pay for pet food, vet bills, and other needs.
Also, consider whether you have any digital images or files that you want your family to have.
Make sure to mail them while you still can. Consider exchanging passwords for social media accounts if you want a family member to close them after your death.
Work with an experienced attorney when putting together the plan
The cost of drafting your estate plan varies according to its complexity and location. If you feel this is the way to go, you should find an experienced estate planning lawyer Upper Marlboro, and put the relevant documents in place.
There are some online businesses that can prepare your documentation at a fraction of the regular lawyer fees, but you should be ultra-cautious of them.
While they could be an option if you believe your estate plan is straightforward and are comfortable with a DIY approach, they can sometimes overlook certain critical aspects that might be integral to the estate plan.
To be on the safe side, stick with a conventional attorney. They might be a little expensive, but they will be worth it.
For a great experience, take time to get to know the attorney. Visit them in their place of work and find out how they work. As a rule of thumb, work with professionals who have been offering the service for years.