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.

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.

Estate Planning Best Practises

Estate planning is not the most exciting subject to talk about. This is because the conversation involves you deciding who will handle your money and property, who will raise your minor children, and who will make health care and financial choices for you if you become incapacitated or die.

While this is the case, your estate plan must be addressed swiftly, correctly, and regularly. After all, your situation, health, and estate laws all change over time.

Without a plan, your wishes will not be respected, and you will most likely leave your loved ones with a slew of issues as they cope with your loss.

You should have an estate plan to protect your property and loved ones. When drafting the plan, you should ensure that you do it right. To help you out, here are tips to ensure that your estate plan is done correctly:

Always go over the estate plan.

Some people think an estate plan is airtight just because an estate planning attorney has prepared it. This is wrong.

Remember that attorneys are people, and they are bound to make mistakes. Their chances of making mistakes are even higher if they have many clients to attend to.

Just because a reputable attorney has prepared your estate plan doesn’t mean you should blindly sign it. Instead, you should take your time and go over it.

Reviewing the estate plan ensures that all specifics, including beneficiary names, asset distribution, and trustees or executors, are correct. This helps to avoid mistakes or misconceptions that could lead to future problems.

By reading the estate plan, you can validate that your wants and intentions have been appropriately translated into legal language. It guarantees that your asset distribution and dependent care wishes are properly documented.

Important details may be overlooked during the drafting process, but by reviewing the estate plan, you can identify and remedy any omissions as soon as possible.

Estate plans do not come in one size fits all. Reviewing the plan allows you to tailor it to your unique circumstances, tastes, and goals.

A well-planned estate plan can help avert disagreements among family members and beneficiaries after your death. You can reduce the likelihood of conflicts and ambiguity by reviewing the plan before signing it.

Going over the plan also allows you to ask your lawyer questions on the areas that need clarification.

Ensure that you understand the estate plan.

Estate planning is complex; if you have never done it before, you might not be conversant with certain aspects.

Some people don’t want to look stupid, so they don’t ask about areas they are uncomfortable with. Don’t do this.

You should always take your time to understand your estate plan.

As a rule of thumb, read over the complete estate plan document. Pay close attention to each area, including the will, trusts, power of attorney, and any other documents that may be important.

Contact your estate planning attorney for clarification if you encounter confusing or ambiguous language. They will explain the legal jargon and the meaning of specific sections and answer your questions.

Understand who the beneficiaries are and how the assets will be dispersed to them. You also should know the roles of trustees, executors, or guardians.

You also should understand the potential tax implications of your estate planning, particularly estate taxes and income taxes for beneficiaries. Your lawyer will assist you in understanding these issues.

It’s always wise to involve your family members in the discussion. Ascertain that they comprehend the essential parts of the estate plan that directly affect them. This can help to avoid future misunderstandings and disputes.

Ensure that the estate plan complies with the current laws

There is no way your estate plan can be binding if it doesn’t abide by the existing laws. To ensure that it does this, engage the services of an estate planning attorney who is well-versed in current estate planning laws. They will be aware of any recent changes and will be able to ensure that your estate plan complies with all applicable regulations.

Estate planning laws are subject to change. To ensure it complies with the most recent legislation, examining your estate plan regularly is critical, mainly when substantial legal changes occur. A good rule of thumb is to review the estate plan every three years.

Remember that estate planning regulations differ from one state to the next. If you own property or have assets in multiple states, ensure your estate plan conforms with each jurisdiction’s rules.

While you should consult with an attorney for legal advice, having a basic awareness of major estate planning regulations is beneficial. For example, get acquainted with estate tax regulations, probate procedures, and trust and will legislation.

Work on reducing beneficially conflicts.

One of the reasons you have an estate plan is that you don’t want conflicts in the future, but you should play a role in the current time to ensure that conflicts don’t arise.

You should openly and honestly discuss your estate plan with your family members. This will help manage expectations and prevent potential issues. Share your intentions, reasoning for your decisions, and any reservations they may have.

You should treat the beneficiaries fairly and equally or explain any inequalities in your estate plan if they are justified. Transparency can help in the prevention of resentment and conflict.

You should regularly review and amend your estate plan to reflect changes in your living circumstances, family relationships, and applicable laws. Updating your plan might help prevent disputes caused by outdated or incorrect directions.

Remember that every family’s circumstance is different, and there is no one-size-fits-all method to preventing beneficiary conflicts. An expert estate planning lawyer Bowie will assist you in tailoring your plan to fit your unique circumstances and objectives.

To have an easy time, ensure that the professional you hire is experienced. This way, you are sure that they will not only draft excellent estate plans, but also offer expert advice on going through the process and the things to include in the plan, and those to exempt.