Tips to Consider When Coming Up with an Estate Plan

Having an estate plan is an excellent way to reduce chaos in your demise and at the same time ensure that everyone gets what you want them to. For you to create a plan you need to consider a number of tips. These tips include:

Be clear about your intentions

Why are you creating the plan in the first place? You need to have a clear reason. Of course, your estate planning attorney can help you come up with a reason, but it should mainly come from you.

Most estate plans are motivated by tax planning, which is an important consideration in wealth transfer, but it is not the only one.

Understanding and expressing the “why” behind the planning can help alleviate the dread of the unknown, which can frequently lead to misunderstanding among family members, conflict among beneficiaries, and loss of family wealth.

So, how do you get started on the road to communication? The first step is to understand your values and how they affect the plan you put in place. Keep in mind that your values may differ from those of your heirs, or they may be the same but expressed differently.

Understanding your values is not intended to control your plan from beyond the grave by imposing those values on future beneficiaries, but rather to provide context for the many structures you have (or have not) implemented.

Understanding these underlying beliefs will help you stay grounded if you confront challenging inquiries from family members about the plan, as well as remind you why you did it.

Aim to build a values-based plan

A clear grasp of your basic beliefs is critical in determining your intentions for the assets you will distribute to or hold for your heirs. Discretionary trusts are a popular planning tool because of their flexibility and creditor protection, but they can keep trustees in the dark about distribution decisions.

Creating a non-binding side letter of wishes to advise a trustee can help maintain the values that guided the planning across generations while also lowering the likelihood that assets in the trust would be dispersed and spent in an unforeseen future.

Explaining why you funded a trust, aside from tax concerns, might be challenging. Writing a letter of wishes needs you to consider what the assets are for (and are not) and how you intend to use them to benefit present and future dependents.

For example, you can finance a trust with the aim of using it mostly for educational purposes but are hesitant to include that provision in the trust instrument due to uncertainties about the beneficiaries’ future needs or the expense of education.

You might finance a discretionary trust and write a letter of wishes stating your desire for the assets to be spent largely for education and why this was a significant motivating factor in establishing the trust.

This would allow the trustee to maintain flexibility while ensuring that beneficiaries understand the trust’s purpose and why specific distribution requests may be allowed or denied.

Letters of wishes may also include information on distributions that may be made if specific conditions are met. For example, the letter may say that beneficiaries would receive specific sums or percentages of trust assets at certain ages or milestones.

The trustee would not be required to make these distributions, which is important especially when there are reasons to keep assets in trust for a beneficiary or make payments on their behalf; however, guidance like this can be useful to a trustee administering the trust years after it is funded, especially if they were not involved in the trust creation.

Share the plan

Once all of the parts of the strategy are in place, the final stage is to share it, but probably not all at once. Sharing knowledge in digestible increments can maintain your family members’ attention and allow them to actively participate in the process by asking intelligent questions.

There is no one-size-fits-all method to this process, but it is frequently beneficial, to begin with some basic estate and financial planning education, which will serve as a foundation for the information you will give over time and assist your heirs in comprehending the many components of your plan.

This instructional element may also be useful for family members who need to start their basic planning.

Next, you may describe the work you did to discover the values that influenced your plan. You can talk about your aspirations for future generations and how your estate plan is designed to support those intentions while also addressing potential problems.

Many families then go on to share information on the various trusts or other entities they have established to pass down wealth.

This section of the talk does not need to involve precise monetary amounts; it is completely appropriate to keep it high-level and focused on the general framework.

You can collaborate with your estate planning lawyer Upper Marlboro to anticipate queries from family members and devise a strategy for dealing with potentially awkward circumstances, keeping in mind that you do not need all of the answers.

Parting shot

Whether the goal is to pass on generational wealth to your children or not, developing a plan based on fundamental principles and correctly communicating it at the appropriate times will assist in guaranteeing that your desires are carried out and your legacy carries on for future generations.

For the best outcome, take your time when creating the plan and always ensure that you let everyone involved know what is going on.

To have an easy time, work with experienced professionals who will not only help you put together the plan, but also advise you on what to include and what to omit in the plan. The professionals will also be your eyes when you are gone.

What You Need to Know About an Estate Plan

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.

Guide on How to Distribute Wealth to Your Children

Dividing your estate among children can be a tough affair. In many cases, the obvious option—an equal distribution of assets among children—is the best choice. However, in other families, giving each child the same inheritance may not make sense.

As any estate planning attorney will tell you, there is a distinction between leaving an equal legacy, in which each child receives the same amount, and an equitable inheritance, in which each child receives what is fair based on their circumstances.

So, when is it appropriate to leave the same legacy to each of your children, and when does a different arrangement make more sense? And how will each decision affect sibling harmony and whether your wishes be carried out as intended?

Let’s find out.

When to give equal amounts

If there are three children, an equitable division clearly means that each will receive one-third of the residual inheritance after both parents have passed away.

It makes sense for each child to get the same inheritance when each child has similar needs and is similarly situated in life, each child has received similar support in the past from their parents, and each child is mentally and emotionally capable and responsible.

For example, if all of your children have graduated from college (with you paying their tuition) and no longer rely on you for financial support, if no child has a disability or serious illness, and if they have all demonstrated financial responsibility, it is logical to divide your assets evenly.

If your bequests include real estate and other tangible assets, you must calculate the value of each asset and decide what is best to leave to each kid.

Even if you believe one or more of your children do not deserve what they are getting, leaving an equal amount can assist in preventing the emotional and financial expenses associated with conflict.

When to offer different amounts

Sometimes giving each child an equal share of the pie may not always feel right. For example, if one of your children is caring for you, you may want to reward them or compensate for lost time and wages.

Perhaps you’ve given one child significantly more money than you’ve given another, such as a substantial amount for a wedding, graduate school, or a down payment on a home.

In this case, instead of leaving your two children with equal inheritances, you may leave less to the child you previously gifted money and more to the child you did not. This distribution adheres to the equitable, not equal, rule.

If you have a child who is unable to care for themselves, you should leave the majority of your inheritance to fund that child’s care through a special needs trust.

A disabled child may require economic support to cover basic living expenditures as well as funding for continuing medical requirements.

Siblings will likely understand the circumstances and will not be insulted by receiving less money, but it is still a good idea to inform them of your plans so that there are no shocks after your death.

Can a child sue for more?

Yes, a child can sue for more, especially when they feel they have been shortchanged.

If you choose not to split your assets evenly among your children, be aware that you are putting your plans and your children in danger of a lawsuit.

What is the significance of this risk, and how likely is it that the outcome will be a different asset division than you desired? Children can sue to contest a will, but with proper estate planning, you can help limit the risks.

The first stage is to create your will with the help of an estate planning attorney while you are of sound mind and memory and without any undue influence from one of your children.

Undue influence means that one of your other children believes—or thinks it may be proven in court—that you were manipulated while drafting your will.

As a result, that youngster claims, you voiced wants that you would not have made otherwise or that were not truly your desires.

You won’t be able to defend yourself against such a claim, therefore make sure no one can successfully debate it.

Lack of capacity is another way a will can be challenged. This challenge indicates that you didn’t understand what you were doing when you made or amended your will, either due to your age or a physical or mental ailment that has harmed your ability to make sound choices.

A child could potentially claim that your will is invalid due to fraud or because your signing was not witnessed.

How do you protect your wishes?

There are steps you can take to reduce the likelihood of a less-favored child fighting your will in court, as well as the likelihood of that child winning if that happens.

A no-contest clause paired with at least some nominal gift can create a disincentive to challenge. A non-contestability provision is simply text in your will that states that any inheritor who contests your will will forfeit any bequests.

That’s where the nominal present comes in—for the clause to work, your child must have something to lose. You’ll need to give the less-favored youngster enough leeway that they’ll likely benefit more from remaining silent than from appearing in court.

It’s an unpleasant option, to be sure, but it may provide the best chance of keeping your will intact. The enforceability of these clauses differs by state, so consult your state’s laws before contemplating this alternative.

According to an estate planning lawyer Bowie, other measures to avoid challenges to your will include the following:
Using a trust to give structure to a youngster who may be unable to manage their inheritance responsibly on their own.
To disprove accusations of lack of ability, have your doctor witness your will when you sign it.
Excluding all children from the will-writing process to prevent charges of undue influence.
Discuss your wishes with each child to avoid surprises and to explain your reasoning.

A case of this nature is most likely to result in a settlement. That settlement will in some way vary your estate plan, because funds will likely end up in a different place or with a different person than you had hoped.

Reasons You Should Have a Good Estate Plan

Estate planning can help you avoid many terrible scenarios, and while it may require some time and money upfront, it can save you from many serious problems later on.

For example, if you do not offer a clear estate plan, the state will do what it believes is best with your estate, which is unlikely to be what you would choose. Do not leave your estate to the state.

Working with your estate planning lawyer and having an estate plan comes with plenty of perks. These perks include:

You minimize family squabbles

Your family may get along well most of the time, but it’s still a good idea to prepare a will to ensure this continues. The prospect of a monetary grab may agitate some relatives, while others may conceal a personal gem that they hope goes unnoticed.

Regardless of your wealth, careful estate planning can save your family from bickering, whether it’s a minor disagreement or a full-fledged lawsuit.

You clarify your directives

You may have always planned for your niece to inherit that heirloom, but unless it is explicitly stated in the estate, anyone can take it.

An estate plan guarantees that your assets go to the person you wish to receive them. By carefully stating your preferences, typically with the assistance of a lawyer, you can ensure that your loved ones remember you fondly and receive what you meant.

You minimize taxes

If you plan ahead, you can reduce the amount of your estate that goes to Uncle Sam while increasing the amount that goes to your relatives.

Cleverly structuring flexible retirement accounts, such as a Roth IRA, can assist in transmitting more tax-free money to your heirs, while other tax-planning methods, such as strategic charitable giving, can help you reduce your tax burden.

You should work closely with your attorney and find strategic ways to go about it.

You avoid a probate court

Set up your estate correctly, with a well-crafted trust, and you’ll breeze through probate court, which is perhaps the most tedious and time-consuming part of the entire process.

Work closely with your attorney and establish a plan that will save you a lot of time and money in the long run.

You protect your heirs

A proper estate plan can also help safeguard your heirs. If your children are minors, your estate plan can specify who will care for them and how they will get money.

It can also shield heirs from repercussions if a relative accuses them of theft. A living will can also assist heirs avoid some of the tough health decisions that arise at the end of a parent’s life.

You keep your family assets together

Estate planning is an effective strategy to keep your money in the family. A trust, when properly structured, can prevent a squandering nephew from wiping out your entire life’s savings in a matter of years. It can also help keep money inside the family if an ex-spouse attempts to take some of it.

Types of estate planning

Estate planning comes in different forms, ranging from simple beneficiary designations when you create a bank or brokerage account to more intricate and extensive arrangements. The following are some of the most common types of estate planning:

A will

At death, a will specifies where the assets you possess individually that do not have a designated beneficiary should go. Property owned jointly, such as with a spouse, flows immediately to the remaining owner(s).

The court will designate an executor to carry out the will and oversee the division of assets when the time comes.

Wills that go into effect are scrutinized in probate court, a public proceeding that allows possible creditors to file a claim against the estate. Only after the estate has been settled with creditors will the residual assets be allocated to the heirs in line with the will.

Beneficially designations

Whenever you open a financial account, such as a bank, brokerage, or insurance account, you will be asked to designate a beneficiary.

When you die, the beneficiary will be the first to collect any funds from the account. If you wish, you can distribute your assets among numerous beneficiaries and designate contingent beneficiaries in the event that the principal beneficiaries die.

Naming a beneficiary is critical: Your beneficiary selection normally takes precedence over any other declarations in your inheritance.

If you die without a will, accounts with stated beneficiaries may still pass directly to your heirs.

Trusts

Trusts come in many different forms, and while they may appear complicated, they are actually quite simple at their foundation. A trust is a legal structure that enables a third party, to hold assets on behalf of a beneficiary.

Trusts provide you with a variety of estate-planning alternatives, the most notable of which is the potential to avoid probate court while keeping a high level of anonymity.

Trusts provide you control over how your assets are distributed after your death, not simply who receives the money but also under what conditions.

This control can be useful when allocating assets to people who lack the competence or maturity to manage money. You can also specify whose trustee(s) you want to oversee and direct the trust after your death.

While trusts can be complex, one of the simplest and most straightforward is the revocable trust. Such a trust guides your assets through probate and directs them according to your preferences.

You can even serve as a trustee and make decisions during your lifetime.

More complex trusts with multiple requirements may necessitate the assistance of a qualified wills and trust attorney Upper Marlboro. Of course, trusts can also be used to avoid some taxes, which is one of the reasons for their perennial popularity.

Parting shot

As you have seen, there are plenty of benefits that come with having a good estate plan. You not only ensure that your property goes to the rightful heirs but also protect them from wasting time in court.

To have an easy time coming up with an estate plan, work with expert attorneys who will hold your hand.

Estate Planning: How You Should Go About It

Most elderly persons agree that estate planning is critical. However, over half of Americans aged 55 and up do not have a will, and even fewer have specific powers of attorney, a living will, or health care directives.

These legal documents assist your representatives in providing the end-of-life wishes you seek. Estate planning also alleviates the load on your loved ones and decreases the likelihood of family strife following your death.

Every senior should have an estate plan, regardless of how much they own. Some people think they should only get a plan if they are rich, but this isn’t the case.

You should get an estate planning attorney and proceed with drafting the plan regardless of the amount of assets you have.

Your estate includes your home, real properties, vehicles, businesses, bank accounts, life insurance, personal belongings, and any debts you may have. The objectives of your estate plan include:

Establishing who will inherit your assets after your death
Establishing a durable power of attorney.
Choosing a trustworthy agent to make health care choices on your behalf if you become unable to handle your affairs due to illness or accident.
Creating a Will and Trust
Reducing estate taxes
Appointing your estate’s executor or representative
Providing peace of mind for you and your loved ones

You need to create a will

A testamentary will is a legal document that transfers your estate to the individuals or charities you name after your death. Your will also allow you to name an executor or personal representative.

This person will ensure that your preferences are carried out. Many older adults select their most responsible adult child for this position.

Inform the person you’ve chosen to manage their expectations, as well as your family, about what to expect in your will. This allows you to answer any queries they may have and avoid family confrontations after you leave.

When you are putting together your will, you need: your executor, beneficiaries, critical assets, and debts (e.g. mortgages, car loans, credit cards).

Be warned that if you have considerable assets in probate court, the process might cost up to 10% of your estate’s value. This can stress your executor’s position and extend the time your family members take to get their inheritance.

You may want to create a trust; this can be done by consulting with an estate planning expert. Building trust can save taxes, limit wealth distribution, and avoid probate.

These trusts are often either revocable or irrevocable living trusts, special needs trusts, or spendthrift trusts. Your attorney can help you choose the trust that best suits your interests.

Drafting your living will

A living will define your end-of-life treatment options and will be used while you are still alive but unable to express health care preferences.

Similarly, a healthcare power of attorney’s decision-making will only become effective if you cannot communicate your intentions.

The person you name as your durable health care power of attorney is usually a caregiver or family member you trust.

When you are creating a living will, consider:

Medications you are willing or hesitant to have given to you
Permission to use a feeding tube if you are unable to eat.
Permission to use life support and its duration, as well as a willingness to accept palliative treatment toward the end of life.
Having a do-not-resuscitate order (DNR)
Your decision to be an organ donor

If you have both documents, the living will precede the healthcare proxy.

Many older persons prefer not to have a living will. Instead, individuals choose to have their healthcare proxy make medical decisions on their behalf if they cannot communicate their desires for treatment and life-saving procedures.

Whatever you decide, you must notify your loved ones about your healthcare preferences.

Think about the power of attorney.

A financial power of attorney, like a health care power of attorney, takes effect when you cannot make financial choices.

The person you nominate will handle your finances on your behalf.

To save unnecessary burden, consider selecting someone other than your health care power of attorney. However, it is legally permissible to name the same individual.

Your financial power of attorney should be highly trustworthy and financially sound. When choosing someone in your life to serve this function, you may want to consider someone who not only lives nearby but is also eager and capable of helping.

The person must be financially responsible, trustworthy, and willing to act in your best interests. Finally, this person should be proactive and helpful in safeguarding your finances.

While these forms outline the fundamentals of an estate plan, your circumstance may necessitate significantly more detail and nuanced skill than a law attorney can provide if they do not also practice estate planning. Begin with a checklist, which includes:

List of your assets and obligations.
Gather relevant supporting documentation.
Select candidates for the executor (personal representative) and power of attorney.
Draft an outline of the estate planning documents described above.
Talk to your family about your aims and wishes.

Work with an estate planning attorney.

When you’ve completed these activities, a skilled estate planning or elder law attorney can examine your efforts and implement your strategy.

You will save time and money by being organized and having a basic understanding of the estate planning process before consulting with an attorney.

This calls for you to dedicate some time to research and gather as much information as possible about estate planning.

When you’ve completed all your estate planning documents, you’ll have peace of mind knowing you have a solid plan to protect yourself and your loved ones.

When finding an estate planning lawyer Largo, don’t hire the first one you come across. Instead, take time to research and find a reputable professional experienced in handling estate planning matters.

The last thing you want is to hire a contractor who causes more harm than good.

Executor of state: What do they do?

The executor of an estate is the person in charge of closing out the financial affairs of a deceased person. If you have already drafted a will with your wills and trust attorney, they will usually designate a close relative, friend, accountant, attorney, or financial institution as executor.

If you want more than one person to oversee your affairs, for example, if you have more than one child, you can name co-executors.

The executor you go with should be trustworthy and wise. Even if they are also an heir, the law requires them to act in the estate’s best interests.

What is the role of an executor? Here are some of the things they can do:

Get the death certificate

The executor is responsible for funeral and burial preparations, which are paid from the estate.

The funeral home will inquire about the number of copies of the death certificate required. The executor should make the copies and use them to notify banks, life insurers, investment firms, and any other relevant organization about your death and to file the last tax returns.

If you were receiving Social Security benefits, it is vital to inform the Social Security Administration immediately to stop those payments and avoid being charged later.

Find your will or trust.

The person you name as the executor should know the location of the trust or will and should be ready to produce it as soon as possible upon your demise.

For the probate court, you’ll need a copy of the will. It is usually required to be filed within a few days to a month after death.

If you already had a living trust, you may be able to skip probate court if the trust was properly set up.

Trust assets can be distributed immediately without court approval, whereas a probate judge must distribute assets covered by a will. The length of the probate process varies by state and spans from six months to two years on average.

The living trust can avoid probate court because the trust owns all of the property and not the deceased person.

Seeks professional advice

Once the executor receives the will or trust documents, they will better understand how difficult the estate administration process will be.

At that point, it’s their responsibility to seek the advice of an estate attorney, tax accountant, appraiser, or any other specialist whose knowledge can assist in avoiding blunders.

An attorney can advise on legal measures to take and assist in answering queries from beneficiaries who may be pressuring for a rapid transfer of assets.

If the estate must go through probate, the attorney will also know which paperwork to complete to help the procedure go as smoothly as possible.

A tax professional will help with final tax returns and concerns concerning inherited assets such as a home, investments, retirement funds, or a family company.

The executor ensures that antiques and property are appraised to determine their fair market value.

Locate the assets and protect them.

A precise inventory of assets and where to get them is the nicest present an executor can receive from the deceased.

Wills, trusts, and papers linked to insurance, investment accounts, prearranged funeral plans, bank accounts, real property such as vacation houses or artwork, company interests, and partnerships are all included.

Documents proving the worth of antiques or collectibles might also be helpful.

The executor should locate the assets mentioned in the will and ensure they are safe and protected. If possible, they should move them to a safe area.

Pay the bills and taxes.

The estate is responsible for paying the deceased person’s bills, including any income and estate taxes payable. Potential beneficiaries are not obligated to pay debts that exceed assets.

Before paying any debts, the executor must ensure that the estate’s assets are sufficient to cover them. If not, the creditors will be prioritized by a probate judge.

The executor must do so if you do not keep precise records of monthly expenses, income, and debts.

The executor should review the checkbook or bank statements, which record the dead person’s payments and deposits.

If feasible, they should go through regular mail, email, and tax returns for more evidence.

A bank can open an account in the estate or trust’s name, allowing the executor to pay bills and accept deposits.

How do you appoint an executor?

Often, the deceased’s will name an executor of the estate. But sometimes it doesn’t, and other times, the dead, also known as the testator, dies intestate (without a testament), or the will is invalid.

In such circumstances, a probate court judge will choose someone to fill this job, usually a close relative.

This individual will be referred to as an administrator or personal representative rather than an executor, but the role will be the same.

To avoid complications and ensure that you don’t leave the control of your estate to the court, you should work with your estate planning lawyer Largo and put together a will.

When choosing an executor for your estate, ensure they are the right fit. You should note that the court can override the deceased’s choice of estate executor if that individual is not of legal age, has a criminal record, has a substance abuse issue, or is suffering from a mental disease.

The court may not appoint a new executor because a beneficiary is dissatisfied with the previous one.

You should take your time with your attorney when finding an executor. As a rule, ensure that the executor you find is ready for the task and is prepared to work with the attorney and beneficiaries and ensure that your will is respected and your estate goes to the right hands.

The last thing you want is to appoint the wrong person not ready to protect your hard work and estate.

Estate Planning Mistakes to Avoid

It might be tough to place a monetary value on a lifetime of collecting your money, your home, its furnishings, vacation souvenirs, and treasured family gifts. It’s fun to acquire these artefacts over time, but too few people think about what will happen to them when they’re gone.

You should consider everything from your life savings to digital assets during estate planning.

While a trained professional can help guide you through the procedure, people still make plenty of mistakes.

Here are some of the common mistakes and what you should do instead to ensure the estate planning process is a smooth one for all concerned:

Forgetting to implement the estate plan

One of the most common mistakes people make in estate planning is generating estate planning paperwork but then failing to implement their estate plan.

To stay safe, create, implement and monitor the estate planning documents. Work with an established estate planning attorney to ensure the process is going as planned. As part of the estate planning process, provide copies of your documents to trustworthy loved ones.

The last thing you want is for the paperwork to get lost.

Thinking you have a lot of time

The most common error people make is believing that death only happens to other people. They don’t take their mortality seriously, or they wait until it’s too late to arrange for their loved ones.

A good way to go about it is to consider what arrangements you have in place for your legacy, consider the significance of it, and read some basic literature on the subject.

If you have the resources to acquire a burial plot and make funeral arrangements, include that information in your estate documents.

Don’t leave it up to your children to find such knowledge. If you have not already done so, you should include your wishes in your will or trust. If you do not do this, your family will have a lot to hash out after your death.

Make a point person responsible for funeral and burial arrangements and ensure that person understands your intentions. If you do not make out your wishes before your death, it may become an issue that must be resolved in probate court, which could severely delay your burial.

Ignoring the tax implications

Death and taxes are unavoidable, but taxes after death are. As kind as it may appear to be to give property to your heirs during your lifetime, it is usually smarter – and far more generous – to postpone the transfer until after your death.

If you transfer the deed to your next of kin before you die, they may face a significant tax bill if they sell the same property.

This is because the basis for that house, ranch, or condo will be tied to your purchase date, not the date of your gift.

As a result, your heirs may be forced to pay a colossal sum that could have been avoided had they been issued the deed after your death.

Leaving room for interpretation

The most severe errors occur not in how documents are written but in how they are understood after the fact.

You should have substantial, in-depth conversations with the designated trustee or given any power of attorney. This will help reduce misinterpretation of trust documents, which will work to your advantage.

Forgetting to update your estate after divorce

Unfortunately, this occurs frequently. You never change the beneficiary of your retirement account or life insurance to your ex-spouse.

Worse, following your divorce, you are forced to keep a life insurance policy for your ex-husband, but you transfer the beneficiary to your new spouse. As you can tell, this often results in costly lawsuits.

Failing to name backups for decision-makers

When tragedy strikes, even the best-laid plans can go awry. If you and your spouse are killed in the same accident, fire, or natural disaster, you should have designated a secondary beneficiary.

Make a plan to deal with unforeseeable and terrible events, and name additional/alternative beneficiaries.

Choose a backup executor and other decision-makers. If they cannot fulfil their commitments due to death, incapacity, or other circumstances, a court will appoint replacements unless you have already provided for these possibilities.

Take care of this as soon as possible and with caution. Remember that it is much easier to prepare for the unknown when you are in good physical and mental condition.

Failing to keep track of beneficiary designations

It may appear that dividing an estate among beneficiaries is simple, but it is not. Consider a parent who intends to distribute equal shares to his children. The will may specify that each child receives a certain amount.

On the other hand, if one child is named as a beneficiary on death to a bank account in an oversight or additional capacity, the child will be the sole beneficiary of the bill regardless of the will.

As a result, in addition to naming the beneficiaries and their corresponding shares in your will, you must also provide your bank with a directive outlining the interests in your account following your death.

If you don’t include this, the bank’s rules will take precedence over anything you’ve mentioned regarding that account, resulting in your total estate going in percentages that differ from those expressed in your will.

Not having an estate plan.

Lack of will or trust can result in your family members fighting in court over your intentions or having the court oversee every element of the administration.

This is especially important if you have little children who cannot inherit money. The court will appoint a guardian to hold the minor child’s inheritance and supervise how the funds are used.

You don’t want this to happen to you, do you?

To ensure this doesn’t happen, work with your estate planning lawyer Largo to develop an estate plan to protect your property and prevent your loved ones from going to court.

What you Need to Know About Living Trusts

You’ve probably heard about the advantages of a living trust when it comes to putting together an estate plan.

Assets placed in a trust avoid probate, which is time-consuming and potentially costly.

Furthermore, a living trust allows you to name a trustee to administer your assets after you die, which is vital if your heirs are little children or adults who cannot handle a substantial inheritance.

While living trusts are great as they simplify the distribution of inheritance, many people make costly mistakes that make the process too convoluted for your estate planning attorney and heirs. What are some of the common mistakes?

Putting the wrong things

There are several things that you shouldn’t put in the living trust. They include: 401(k) plan, IRAs and tax-deferred annuities

According to Kris Maksimovich, president of Global Wealth Advisors in Lewisville, Texas, if you move any of these funds to your trust, the IRS would interpret the transaction as a distribution, and you must pay income taxes on the full amount. You don’t want this, do you?

To avoid this, you should designate your trust as the beneficiary of your retirement assets. By naming your trust as a beneficiary, you can control how your assets are dispersed to your heirs and protect the cash from creditors.

Failing to include vital items

The same way people add the wrong things is the same way they fail to add vital items. To stay safe, add the right items to your trust. The things that you should add include:

Real estate, including your home

It could be your most valuable asset, and it’s a good one to put in trust. This will shorten the time it takes to transfer the home to your heirs.

If you own property in another state, such as a vacation house, transferring the ownership to a living trust allows you to avoid probate in more than one state. You’ll need to draft a new deed transferring property ownership to your trust.

Transferring your home to a trust will help your selling capacity. While this is the case, you should note that to refinance your mortgage or receive a home equity line of credit, your lender may ask you to transfer the property from the trust and back into your name.

Once the transaction is complete, you can return the property to the trust.

Financial accounts

These include stocks, bonds, and mutual funds. You should also include certificates of deposit, money market funds, and bank savings accounts that are rarely used to write checks. You can even include your safe deposit box in the trust.

Adding these accounts requires some paperwork, so work with a professional who knows what they are doing.

Personal items such as collectibles, jewelry, and art

You don’t normally need to retitle these assets, but you should make a list with instructions to include them in the trust.

You can use the trust to specify who should receive these assets, which comes in handy in avoiding family feuds once you are gone.

This type of guidance can also be provided in a will, but a will becomes a public record, which is undesirable if your pearls are valuable.

While the car you drive around town is unlikely to belong in a trust, you may add any collectible vehicles you possess, especially if you believe the vehicle’s value will hold or increase over time.

After transferring and retitling assets to your trust, you should review it regularly to ensure it’s current.

The best way to go about it is to do the review on an annual basis. In other circumstances, every three to five years may be sufficient, although you may need to review (and maybe alter) the trust following a big life change, such as the sale of your house, the birth of a child or grandchild, or a marriage or divorce.

Do you need a trust?

As much as trust is important for you and your loved ones, you should note that it’s not for everyone. It’s not everyone that should create one.

Before you go ahead and find a lawyer and draft one, you should ask yourself whether it’s wise to get one in your current situation.

As previously said, funding a living trust needs some legwork and consideration of expense. Legal fees can also be high, depending on where you live.

A living trust may be worth the cost if it eliminates the complexities of probate.

Because most states exempt a specific amount of assets from probate, you probably don’t need a living trust if your estate is small—less than $100,000, for example.

Furthermore, if the majority of your assets are in retirement funds, you may not require a living trust because those assets will pass to beneficiaries outside of probate.

Life insurance with a named beneficiary will also avoid probate because the recipient will pay the death benefit.

You can make bank and other accounts receivable upon death to your heirs, in which case the accounts will avoid probate. Property owned jointly, such as a home you and your spouse own, will also pass to the surviving owner outside of probate.

Before you spend money on wills and trust attorney PG County, find out if your property is large enough for a trust. If not, save the money.

Parting shot

These are some of the things you should know about a trust. Many people shy from setting up a trust because they think it’s complicated, but it’s not.

Others avoid it as they have a will. You should note that while a will is an important aspect of estate planning, it is not a one-size-fits-all answer.

A will must go through probate, which may be an expensive and public process. A living trust, on the other hand, allows for a more private and efficient asset distribution.

If your property is large enough, there is no harm in having both a living trust and a final will and testament, offering you the best of both worlds.

Understanding Living Trusts

A living trust is a trust that you establish and fund while you are still alive.

The basic goals of a living trust are:

To manage and distribute assets and trust property to named beneficiaries without the probate court’s involvement.
To ensure that assets are transferred smoothly to named beneficiaries in the case of the grantor’s incapacity.
Assets are used to provide financial stability to family members.

You can establish a living trust as long as you are mentally and financially competent. There is no minimum age for establishing a living trust, though it is more customary for older people to establish one.

To establish a living trust, you must have assets to transfer into the trust and a clear knowledge of your trust’s aims.

When considering a living trust, it is critical to speak with a wills and trust attorney or a financial advisor, as they can help you assess whether a living trust is right for your case and provide information on the legal and financial concerns involved in establishing one.

Why should you have a living trust?

People establish living trusts for a variety of reasons. Some of the reasons you should consider getting the trust include:

To avoid probate

Probate is the legal process that follows the death of a person in which the court oversees the distribution of the deceased person’s assets.

When you have a trust, the assets flow immediately to the beneficiaries listed in the trust document without the requirement for probate court.

This not only saves you time, but also money.

To help with asset management

A living trust allows you, the grantor, to retain control over your assets administration and distribution during your lifetime.

You can serve as the initial trustee, deciding how the funds will be invested and managed. In the case of revocable living trusts, you can change the trust’s provisions at any moment.

However, in the case of irrevocable living trusts, you must obtain the beneficiaries’ agreement to change the trust provisions.

To ensure privacy

Individuals with large assets or those who prefer to keep their financial matters secret can use trusts and outlets to keep their information confidential rather than on the public record because it provides more privacy than a will.

To avoid contest

A well-drafted living trust specifying your preferences for asset distribution can help avoid contests over your assets.

This can help lessen the risk of disagreements among specified beneficiaries while ensuring that your desires are followed even in your absence.

Helps in planning for estate taxes

You can use a living trust for estate tax planning because you can establish certain trusts to reduce federal estate tax liabilities.

This can help you protect your assets’ value while reducing the overall burden of estate taxes.

Helps with the transfer of assets in the event of incapacity

If you are incapacitated, you can appoint a trustee to help manage the trust and make decisions about the assets on your behalf.

This can guarantee that assets are transferred smoothly to the chosen beneficiaries and prevent needing a court-appointed guardian or conservator.

How to establish a living trust

As mentioned, putting together a living trust can help ensure your assets are managed and dispersed in accordance with your preferences. The following are the stages required in establishing a living trust:

Decide on the type of trust you want

The first stage in forming a living trust is deciding on the type of trust you will establish.

As mentioned above, you can amend a revocable trust or revoke it at any time, whereas an irrevocable trust cannot be changed or canceled without the approval of the beneficiaries.

Before making a decision, weighing the advantages and disadvantages of each type of trust is critical.

Create a trust document.

The next stage is to draft a trust document once you’ve decided on the type of trust you wish to establish. This document defines the trust’s terms, which include:

The trustee selection.
Beneficiaries.
Any limits or restrictions on how the trust’s assets may be used.

Have the trust document notarized or signed by an attorney

For a trust document to be legally binding, you should have it notarized or signed by a lawyer. This guarantees that the document satisfies all legal standards and is legally enforceable.

Set up a trust bank account.

Setting up a separate bank account for the trust is recommended to make managing the trust’s assets easier.

This also ensures that the trust assets are not mixed with personal or corporate assets.

Transfer all the assets into the trust.

The final stage in establishing a living trust is transferring ownership of all the trust’s assets to the trust.

Real estate, bank accounts, stocks, and any other assets you wish to put in the trust are all acceptable.

Transferring ownership of these assets ensures that the trust is managed and distributed in accordance with the requirements of the trust document.

To ensure the trust is properly established and managed, speaking with an expert estate planning attorney is critical.

Difference between a will and trust

Many confuse trusts with wills, but the two are different.

A will describes how an individual’s possessions will be allocated after death and can be used to designate a guardian for young children. A will is only effective after the person’s death.

On the other hand, a trust is a legal structure in which a trustee keeps and administers assets for the benefit of the trust’s beneficiaries.

A living trust transfers ownership of assets to the trust while the grantor is still alive, and the trust conditions govern how the assets are divided after the grantor’s death.

Parting shot

This is everything you need to know about a trust. As you have seen, many advantages come with having one. There are also many types of trusts that you can get.

Regardless of the reasons and types of trusts that you get, ensure that you work with an experienced probate attorney PG County to help you put together a solid document.

Understanding Estate Planning and Its Advantages

If you’re like the majority of Americans, you don’t have an estate plan. According to a Law Depot poll from 2023, 73% of respondents had no estate plan. Furthermore, 72% of respondents over 75 didn’t know what was an estate plan.

Unfortunately, estate planning is an easy process to put off. Nobody likes thinking about death or what happens before or after death.

However, as much as you despise the idea of death, you don’t want to subject your family to hours and days of dealing with the mess that a lack of forethought would cause.

Losing a close member is easier enough with the additional and quite avoidable complications that arise in the absence of estate preparation.

Cleaning up a neglected estate is both time-consuming and costly. That is why focusing on the benefits of estate planning for you and your loved ones may be what you need to design and finalize an estate plan or update an existing plan.

What estate planning entails

Estate planning entails creating and executing the documents required to handle your health care and financial affairs if you become incompetent or die. To attain this purpose, you need to prepare several documents. The names of the specific documents vary depending on where you live, but the purpose is the same.

The common documents you need include:

Guardianship. If you have minor children or other dependents, these documents state who will have custody of your children if you and your spouse die.

Trust. A fiduciary agreement that protects your estate from probate while also allowing you to personalize your estate plan.

A durable power of attorney. A legal instrument that permits your spouse, partner, or another third party to manage your finances if you cannot make decisions for yourself.

Financial power of attorney. A legal document that authorizes a third party to manage your financial affairs.

Advanced health care directive. A document outlining the medical care you wish to receive if you cannot make your own decisions.

Health care Power of attorney. A document that gives a third person the authority to make medical decisions on your behalf.

Authorization under HIPAA. A document that allows people to access your medical records and contact your doctors.

Before you create these documents, you need to do some work. You must inventory your assets and select who will inherit them when you die.

You also must select who will care for your minor children, if you have any, and who you can rely on to manage your financial and medical affairs if you become disabled.

To ensure the necessary forms are properly executed, you should employ an experienced estate planning attorney familiar with your state’s estate laws. That person will collaborate with you to interpret your wishes into the necessary documentation.

That is a lot of expensive labor, which explains why many people do not have estate plans. But don’t let that discourage you. This is because there are plenty of advantages to creating an estate plan. They include:

You secure your health and finances.

Nobody wants to think of becoming incapacitated. However, it does occur, particularly among the elderly. According to the Alzheimer’s Association’s 2023 Alzheimer’s Disease Facts & Figures report, over 6.7 million Americans aged 65 and over have Alzheimer’s disease, with 73% being 75 or older.

Columbia University researchers also discovered that 10% of persons over 65 had dementia, including Alzheimer’s, and another 22% had mild cognitive impairment.

Other diseases and illnesses affect older persons more frequently as they age. According to the National Institute of Health, 85% of Americans aged 65 and over have at least one chronic health condition, and 60% have two chronic health issues.

Cardiovascular disease, cancer, chronic respiratory disease, and diabetes are examples. While you may not experience cognitive impairment as you age, a confluence of chronic diseases can deplete your energy and capacity to reason and think coherently.

That is why preparing an estate plan where your family or other designated individuals can step in if necessary is critical. For example, you could have a stroke and require someone else to make medical decisions.

Without the essential paperwork, vital medical care may be delayed, resulting in bad results that could have been prevented if the proper information had been available.

In the long run, you may need assistance paying your expenses and making financial decisions. Unfortunately, when memory decreases, many older persons become victims of financial fraud.

Having someone you trust as a sounding board for your decision-making process might help prevent occurrences that can drain your money and cause financial problems.

You fulfill your wishes.

If you die without an estate plan or will, your assets will be dispersed according to the laws of your state. This is referred to as dying intestate. For example, suppose you want your spouse to inherit everything and your children to inherit whatever is left after your partner dies.

In some states, if you die without a will, your spouse inherits half of your possessions, and your descendants inherit the rest.

Another potential issue frequently arises: if you remember to amend a will you prepared years ago, your assets may be dispersed correctly.

Many times, people write a will when their children are young and then neglect to update it. Your life condition may have altered, but your will may not have.

Consider this: you may be divorced, yet your first spouse is still named in your will. If this is the case, you should contact an estate planning lawyer Upper Marlboro to get it updated.

There are numerous other instances in which an estate plan should be updated. Perhaps you sold a business, and a simple will no longer suffice; a trust may be required.

You should speak with an expert estate planning attorney who will help you choose the best vehicle to ensure your desires are fulfilled after your death.

You Avoid Probate

Probate is the legal process of recognizing a will and administering an estate. Probate can take place on a city or county level, depending on the jurisdiction.

All documents involved in probate, including a will, are public records and can be found on the internet with a simple search. Probate requires fees and, in some cases, lawyers. While going through probate without a lawyer is possible, it is a time-consuming and complicated process.

When you have a will as part of the estate planning documents, you avoid the costs and headache that comes with probate.

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