Estate Planning Tricks to Avoid Future Litigation

Nobody wants their family’s final recollections of them to be a dispute over their assets in probate court. Unfortunately, far too many families find themselves in contentious estate administration processes following the death of a loved one.

While this is the case, yours doesn’t have to be one of them. Use these estate planning methods to avoid future litigation. This manner, your assets will reach your family faster, without becoming stuck in a probate battle with a probate lawyer:

Start the process early while you are still healthy

One of the most common reasons why family members file Will challenges is “lack of capacity.” This means that the petitioner believes the individual who drafted the Will was not of sound mind when the document was signed.

To avoid probate disputes, begin estate planning as early as possible, while you are still healthy. This will keep family members from questioning your legal competence and make it more difficult to oppose your wishes later on.

Minimize your probate estate.

Another estate planning trick for lowering the danger of litigation is to limit or even abolish your probate estate. To avoid probate court, consider using a revocable living trust, beneficiary designations, jointly owned assets, and other estate planning options.

By withdrawing assets and monies from your probate estate, you make it more difficult and financially risky for an heir to reverse your estate planning by putting more assets in the hands of your trustee and intended beneficiaries.

Communicate your estate planning strategy with the beneficiaries

Probate litigation is frequently initiated when a deceased person’s natural heirs are taken aback by the language in their Will or trust. When a spouse or child is omitted without warning, or the distribution of assets alters, those who receive less are more likely to submit a petition to have the Will set aside.

As a result, one estate planning technique for avoiding probate litigation is to simply convey your desires to beneficiaries and family members beforehand.

This is especially crucial if you decide to deliberately disinherit a natural heir. Open communication about your desires will lessen the likelihood of a potential beneficiary becoming surprised after your death.

It also makes it more difficult for the successor to claim that their omission was the product of improper influence.

Update your estate plan.

Once your estate plan is complete, you should review it every few years to ensure that everything is up to date. You may need to add beneficiaries owing to births or weddings, remove them due to deaths or divorce, or change the distribution of your assets to account for property purchased or sold in the meantime.

It’s also critical to stay current on legal developments. Keeping your estate plan up to date reduces the likelihood of litigation by eliminating ambiguity.

If a Will has not been updated in a long time, it can be difficult to decide whether a car award applies to its successor, or how a bank account should be divided if the balance is significantly less than the amount mentioned in the Will, for example.

A reasonable rule of thumb is to review your estate plan for revisions every 3-5 years, or whenever there is a birth, wedding, divorce, or funeral in the family.

Have the vital documents

Most people think of estate planning as something that occurs after death, but a solid estate plan will also contain durable powers of attorney (DPOA), a healthcare surrogate, and possibly a living will.

These estate planning contracts take effect when you are no longer capable of making financial or healthcare decisions for yourself.

Executing these forms while you are still healthy is an important estate planning approach to help your family avoid probate court since they eliminate the requirement for the probate court to appoint a Guardian or Conservator to manage your estate.

Distribute your estate plan documents to the right people

You have the right to keep your trust paperwork and other important aspects of your estate plan private.

Other paperwork, such as beneficiary designations and powers of attorney, should be issued to the professionals in your life to ensure that your care and the facility’s services are uninterrupted. You should submit these materials to:

  • Each agent, personal representative, healthcare provider, or power of attorney designated in their specific documents
  • Your bank, credit union, or financial institution (DPOAs and beneficiary designations).
  • Financial advisors, accountants, and stock brokers (DPOAs, beneficiary designations, and some trust forms)
  • Your healthcare providers and chosen hospital (HIPAA releases)
  • You should also have a copy of your whole estate plan in a safe place at home, and your attorney should have a copy as well.

Discuss the estate plan with a reputable attorney.

While estate planning is about carrying out your intentions and should always represent your goals, it is wise to seek assistance with the actual drafting process.

Before signing any contracts, consult with an expert estate administration lawyer about your estate planning strategy.

This allows you to detect potential probate lawsuit risks early on and make changes to safeguard your family from a time-consuming and taxing probate litigation procedure.

When you are hiring an estate planning attorney Upper Marlboro, hire an experienced one who can handle both estate planning and probate litigation.

Since the professional understands what can cause a Will challenge and how to avoid one, they will advise you on what to do and what to avoid.

All you need to do is to research the attorneys in your area. Many people go for the first attorney they come across. This is wrong.

The best way to go about it is to get in touch with five or more contractors and interview them. You should only consider hiring the most qualified.

You should meet the most qualified people, discuss the many estate planning techniques available, and assist you in making decisions that will limit the likelihood of your family becoming involved in disputed probate litigation.

Is Estate Planning Only for The Wealthy?

When you hear the term “estate planning,” what comes to mind? For many, it’s an image of the ultra-wealthy meticulously mapping out how to distribute their vast fortunes.

But here’s the truth: estate planning is not just for the ultra-wealthy. In fact, it’s something everyone can benefit from, regardless of their wealth.

It’s simple to understand why estate planning is frequently connected with the wealthy and famous. High-profile cases in the media frequently feature multimillion-dollar estates, intricate trusts, and expensive inheritances.

Unfortunately, this narrow view overlooks an important point: estate planning is about more than money. It is about fulfilling your wishes, safeguarding your loved ones, and providing you with peace of mind.

So, even if you don’t have a lot of money, consult an estate planning attorney to help you put together an estate plan that will give you plenty of benefits.

You have peace of mind.

Perhaps the most significant advantage of estate planning is the peace of mind it brings. Knowing that your wishes will be fulfilled, that your loved ones will be cared for and that your affairs are in order can alleviate a great deal of tension and anxiety.

Estate planning shows love and consideration for the people you care about the most.

You protect your loved ones.

Providing for your loved ones is one of the most critical components of estate planning.

This extends beyond just distributing assets.

It entails choosing guardians for small children, establishing trusts to manage finances for beneficiaries who may not be prepared to handle them, and ensuring that trustworthy individuals make your healthcare and financial decisions if you are unable to do so yourself.

Consider parents with small children. Without an estate plan, the court will determine who will care for your children after you die.

By naming guardians in your will, you can ensure that your children are cared for by individuals you trust the most.

You get to make healthcare and financial decisions

Estate planning includes your intentions for health care and financial considerations. A durable power of attorney and an advanced health care directive (sometimes known as a living will) are essential to any estate plan.

These agreements allow you to designate someone to choose for you if you cannot.

Assume you’re in a circumstance where you can’t express your wishes due to illness or injuries. An advanced health care directive guarantees that your medical care preferences are understood and followed.

Similarly, a durable power of attorney authorizes a trusted someone to handle your financial affairs, ensuring that invoices are paid and financial responsibilities are met.

You minimize taxes and expenses.

While estate taxes are not a concern for everyone, estate planning can help you save money on taxes and expenses.

By structuring your estate tax-efficiently, you can decrease the burden on your heirs and ensure that more of your assets benefit your loved ones rather than the government.

Even if your estate is tiny, there are methods to reduce taxes and expenses with good planning.

This could include taking advantage of exemptions, establishing trusts, or making charitable contributions.

Estate planning tools that you need

There are a few. People frequently use more than one tool, depending on their needs. These tools include:

Last will and testament

This is one of the most popular kinds of estate planning. A final will and testament allows you (the person who owns the estate) to specify how you want the estate handled after your death. A will is relatively simple to create, but there are several conditions for a will to be recognized as legally effective.

Working with an experienced estate planning attorney can help guarantee that these standards are fulfilled. The attorney will guide you in what to include in the will and what to leave out.

One crucial function of the last will and testament is to designate guardianship for any minor children who may be orphaned. If no guardian is named in the will, the choice is left to the courts.

Living will

A living will, also known as an advanced healthcare directive, is something everyone should have. It outlines what you would and would not want to happen in terms of medical interventions as you near the end of your life.

A living will is activated when you become disabled and unable to communicate your wishes, whereas a regular will takes effect when you die. The living will answer concerns about whether you want feeding tubes, artificial respiration, CPR, and other life-sustaining medical treatments.

Without a living will, those decisions could be taken by family members who may either disagree with what you would have wanted or they may disagree with each other, leading to lengthy, costly court conflicts over your care.

Power of attorney

A power of attorney (POA) designates someone else to act on your behalf if you become incapacitated. POAs can be used in a variety of situations, including business transactions.

A healthcare POA is one of the forms that must be completed for an advance healthcare directive. It designates a person you trust to carry out the directive’s wishes. It only activates once you become incapacitated.

A financial POA also names a person legally authorized to handle your financial affairs if you become incapacitated. For example, suppose you are involved in a vehicle accident and finish up in a coma. In that case, the person listed in the financial POA can ensure that your expenses are paid, among other things.

When you die, the POA loses its power, and the traditional will takes effect.

So, who can benefit from an estate plan?

Ultimately, everyone can profit from estate planning. While it is vital for individuals with assets, even those with only a few possessions should consider estate planning.

While it is commonly regarded as a worry for the elderly, younger persons with assets or dependents will benefit as well.

Life is unpredictable, and everyone should be prepared for the worst. It’s better to be proactive and consider your future requirements and aspirations than to leave everything to chance.

Work with an experienced estate planning lawyer Upper Marlboro and put your life in order.

Estate Planning Guide

Estate planning is the act of structuring and arranging your assets to ensure that they are transferred in accordance with your preferences after your death or incapacitation.

Creating a detailed estate plan assists you in safeguarding both your loved ones and your possessions.

Unfortunately, there is no one-size-fits-all solution for developing an estate plan. The specifics will depend on your unique circumstances. While this is the case, the following steps will help you become organized and easily start the process.

Put together your team.

You should assemble a team that will help you create your estate strategy. In your team, you may wish to include a financial advisor, a tax specialist, and an estate planning attorney to create a comprehensive, customized estate plan.

Each member of your team should be able to contribute to the process and offer crucial legal and financial guidance.

Together with your team, devise a strategy to guarantee that your assets are allocated to the people and organizations you specify with as little uncertainty as possible.

Have a guardian for your dependents.

The next step you should do is decide who you want to care for your dependents (if any) after you die. These could be little children, a loved one with special needs, or elderly parents under your care.

If no guardians are listed in your estate plan, a probate court can appoint one for you.

Before naming a guardian, make sure you consult with them ahead of time to obtain their consent. You should note that they are not required to manage a child’s inheritance.

You can appoint a third person, such as a trustee, to handle money or assets until the child is old enough to manage their inheritance on their own.

Also, remember that identifying a couple as co-guardians can be challenging if they divorce. Discuss this matter with your estate attorney, and consider appointing a backup guardian for your dependents.

Outline your wishes pertaining to assets and dependents

You should express your preferences about your assets and beneficiaries. Remember that without an estate plan, a judge may make such decisions for you in probate court.

To limit the danger of your assets going to probate, which can be long, expensive, and not in accordance with your preferences, include the following estate planning documents in your end-of-life strategy:

A living will: A living will, also known as a medical care directive, specifies the medical procedures you want and do not want to receive at the end of your life.

A healthcare Power of Attorney (POA) document, also known as a medical POA or healthcare proxy, gives someone you choose the authority to make healthcare decisions on your behalf if you cannot do so.

Advanced healthcare directive: An advanced directive provides instructions on medical treatments and healthcare services if you become incapacitated.

An advance healthcare directive often includes two documents: a living will and a healthcare power of attorney (POA).

Last will testament: A last will and testament specifies your preferences for your property and dependents after your death.

This document allows you to name beneficiaries, designate guardians for minor children, and appoint an executor for your estate, who will carry out your wishes as outlined in your will.

Create a trust

A trust is meant to hold money and other assets for your heirs. When you create a trust, you control what goes into it, who receives what, and how it is dispersed.

A properly constituted trust ensures that your plan is carried out exactly as planned. It may also prevent your estate from entering probate.

You should work with an estate planning and trusts attorney to ensure that you select the appropriate trust for your needs and that it is formed by your objectives.

As you create a trust, you should know that there are many types of trust. The most common ones being:

Revocable living trusts: A revocable living trust allows you to modify or terminate the trust at any time prior to your death. When you pass away, your revocable trust becomes irrevocable.

Irrevocable trusts: Once created, you cannot change or terminate them. While irrevocable trusts lack the flexibility of revocable trusts, they provide further protection against litigation, creditors, and taxes.

Charity trusts allow you to donate assets or money to a nonprofit organization. The good thing is that assets in a charity trust are no longer considered personal property, so they can be passed to your beneficiaries without being subject to taxes or lawsuits.

Plan for estate taxes

Estate taxes are federal taxes levied on assets such as cash, real estate, stocks, and other valuable property. You should note that your beneficiaries must pay estate taxes after receiving their inheritance, usually payable within nine months of your death.

You can do several things to prepare for or reduce estate taxes, including putting assets in an irrevocable trust or making contributions to family members.

You should consult a tax professional who can collaborate with your attorney and financial advisor to identify which estate tax preparation techniques suit your situation.

Work on avoiding probate.

Probate is the legal process of having your will verified through the courts. It can be time-consuming, expensive, and very public because probate cases are public records.

Furthermore, if you have not specified your wishes in your estate plan, a probate judge may make choices you disapprove of.

Fortunately, you can avoid probate by writing and maintaining a will, naming an executor for your estate, and appointing a trustee to handle trust assets.

Parting shot

These are some of the things you can do when creating an estate plan. As mentioned, you should try as much as possible and ensure you have a solid estate plan before you die. As a rule of thumb, work closely with an experienced probate attorney Largo who will hold your hand and guide you through the process.

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.

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.