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.

How Do You Get Around Probate Court?

Probate court, which legalizes a dead person’s will and distributes assets, is sometimes considered cumbersome. Many people want to find ways to simplify the estate settlement process and reduce intervention by a probate court.

Though probate performs an extremely important function of ensuring that assets are distributed smoothly, it is not unusual for people to look into other means–to avoid possible disadvantages. In the following article, we’ll look at several ways you can use to get around probate court together with your probate lawyer.

Understanding Probate

Probate refers to the court-supervised procedure by which a deceased person’s will is verified and their property distributed.

Steps involved in probate court

1.       Filing a petition

The procedure normally starts with the filing of a petition in probate court. This petition can be submitted by the executor designated in the will or an interested party, such as a family member or creditor.

2.       Appointment of executor or administrator

Upon review by the court, a valid will name an executor. If no one is named or if the person appointed, for any reason, refuses to serve, a court will appoint an administrator. The executor or administrator controls the estate of the deceased right through probate.

3.       Notifying creditors and heirs

Probate proceedings must be notified to creditors and heirs of the deceased. The process usually involves publishing a notice in a local newspaper and formal notification to known creditors or beneficiaries.

4.       Inventory and appraisal of assets

Moreover, the executor must also establish an inventory of all assets belonging to the deceased person (real property as well as bank accounts and investments), personal belongings, and other valuable things such as heirlooms. In some cases, a professional appraiser will be taken on to set the value of various assets.

5.       Payment of debts and taxes

The estate’s debts and taxes must be paid off before any assets can go to heirs. It means paying off outstanding bills, funeral costs, and any estate or inheritance taxes payable. The executor takes care of these financial responsibilities.

6.       Challenging the will (if applicable)

The will may be contested. The main reasons a will is contested are lack of capacity, undue influence or fraud in making it, and improper execution. Will contests can delay probate?

7.       Distribution of assets

After the debts, taxes, and other charges have been paid out of them, these assets are distributed to one or more beneficiaries in accordance with the terms of a will (where there is one), otherwise according to intestacy legislation.

8.       Final accounting and closing of the estate

The executor has to give the court a final accounting of assets, liabilities, and distributions regarding the estate. After the court approves the final accounting, it issues a closing order for the estate. With that, there ends the probate process.

9.       Distribution of inheritance

After receiving court approval, the executor can pass on to beneficiaries and heirs any remaining assets as laid out by law in the will or according to intestacy laws.

10.       Final discharge of executor

When all necessary tasks have been accomplished and court approval received, the executor is formally discharged from their responsibilities. This completes the probate procedure.

How to bypass probate court

Establish a living trust.

Living trusts are a good way to avoid probate court. A living trust is a legal entity that holds assets for an individual during his or her lifetime and then transfers them to beneficiaries at death. 

In contrast to a will, which must be probated in the event of your death and passed through various legal channels before assets can finally get distributed, a living trust functions independently of court.

Establishing a living trust entails transferring ownership of assets to it, with oneself as the initial trustee. Choosing a successor trustee ensures the smooth changing of hands. Because the trust owns all assets, probate court participation is reduced. Estate settlement, therefore, progresses more smoothly and at a lower cost.

Joint ownership with right of survivorship

Joint ownership with the right of survivorship is another way to avoid probate. This includes taking out assets jointly as one’s spouse, parents, or another individual so the surviving co-owner can inherit the asset. 

Joint ownership is a simple way to avoid probate, but factors such as quarrels between joint owners or unexpected consequences should be considered. Also, this method is unsuitable for all sorts of assets, and legal advice should be sought on the proper titling of those acquired.

Designating beneficiaries

A number of assets, including life insurance policies, retirement accounts, and bank accounts, can be left to beneficiaries. These assets can be passed directly to the designated beneficiaries by naming specific individuals or entities as recipients. 

This simple procedure means that assets can be distributed more rapidly. It is also a strategy often used to simplify the estate settlement process. Regularly reviewing and updating beneficiary designations is very important after major life events such as marriage, divorce, or the birth of children.

Keeping beneficiary designations up to date is an important part of the proactive estate plan. Otherwise, there may be unintended consequences.

Small estate procedures

In certain jurisdictions, estates of modest value may be subject to abbreviated probate processes called “small estate” or “summary administration.” These simplify the procedures for small estates below a predetermined asset cutoff.

They result in speedier disposal and less paperwork.

The estate generally must meet certain criteria to qualify for small-estate procedures, which include a low total asset value and no contested claims. That said, executors or administrators can use these procedures advantageously in probating estates as long as they understand the eligibility requirements and rules that apply to them at any given time.

Conclusion

Even though probate plays an important role in maintaining the orderly distribution of assets, it is not necessary.

Through methods such as studying living trusts, joint ownership arrangements, beneficiary designations, and small estate procedures are highly effective, you should note that the effectiveness of the process would depend on the particular case in question, and a professional legal opinion from a reputable probate attorney PG County is always called for when planning estates.

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.