An estate plan can be as basic or as comprehensive as you need it to be, and this depends entirely on the documents that you include and the actions that you take in the estate plan. Estate plans are not just for those who are wealthy, as they can help anyone protect themselves and provide benefits for their loved ones. An experienced Bloomington estate planning attorney is an important resource for understanding what your goals are and how your estate plan can serve those needs.
Estate plans can have many documents and actions, including:
- Living wills
- Jointly owned property designations
- Wills
- Many types of trusts
- Pay-on-death designations
- Beneficiary designations
- Powers of attorney
- Buy-and-sell agreements
- Medical directives
A Will
A last will and testament is a basic estate planning document. It prevents your estate from being distributed by the state’s succession laws. Even for those who do not have a comprehensive estate plan, a will is an important document to have, as it can provide a plan for your estate after death. A will can avoid intestate succession, but it does not avoid probate court. A will can:
- State the assets and debts in your estate.
- Name heirs for portions or all of the estate.
- Name a guardian for any minor children you have.
- Place a trusted individual as executor to handle creditor claims and asset distribution.
You will can be updated throughout your life as your wishes, your family, and your life change.
When you have a will, the probate court will review it to determine its validity, and then place the designated executor in charge of managing inventory, creditor claims, estate closure, and the distribution to beneficiaries.
However, if the court finds that the will is not valid, or if someone successfully contests the will, the court will use a prior and valid version of the will. If no version is considered valid, the court will appoint a representative for your estate to divide the assets according to succession laws. Having an attorney who has significant experience in valid estate planning can help avoid this situation.
Trusts
Your estate plan could include one or many trusts, depending on your needs. Like a will, a trust enables you to name beneficiaries to your assets. However, a trust is a legal entity that keeps assets out of probate court. This has the added benefit of keeping the assets and their beneficiaries private.
A trust can also have stipulations that must be met before a beneficiary can inherit the assets. This means that the trustee can take care of the assets until a minor child reaches 18 or other specifications are met. This allows you more control over when and to whom your assets benefit.
With a trust, you can name a trustee to manage it and distribute its contents after your death. Typically, you name yourself as the trustee while you are alive and list the successor trustee who will take over after your death. This individual has a fiduciary duty to the estate, its assets, and its intended beneficiaries. Because the transfer of assets happens outside of probate court, it typically can occur much faster.
Trusts are either revocable or irrevocable. Revocable trusts can be altered by you as long as you have the legal capacity to do so, while irrevocable trusts require significantly more steps if you want to update or change anything. However, an irrevocable trust has more tax benefits during your lifetime than revocable trusts.
Powers of Attorney
Powers of attorney are a way for you to provide trusted individuals with specific legal powers if you become incapacitated. This frequently happens to individuals near the end of their lives or due to an unexpected injury. Powers of attorney help you determine who can make decisions on your behalf.
A durable power of attorney has power over your finances, and a designated person can make these decisions for you if you can’t. A healthcare power of attorney can determine medical decisions for you, including following the instructions of medical directives.
Advance Medical Directives
A living will, which includes medical directives, can explain the procedures and treatments that you do and do not allow if you are incapacitated and cannot make these choices. It can also list how you want life support to be handled.
FAQs
Q: What Are the 3 Main Priorities You Want to Ensure With Your Estate Plan?
A: Every person who makes an estate plan will have their own priorities. The most common include:
- Limiting the time, energy, and money your beneficiaries must spend in probate court, thus providing them with the most amount of benefits from your estate
- Ensuring that you are taken care of if you become incapacitated before you die or at any point in your life
- Protecting your estate during your life and after your death
Q: How Do You Organize Documents for Estate Planning?
A: It can be helpful for your trustee or executor to have an inventory of all your important documents, including your estate planning documents, and how to access them. Your estate planning documents should be somewhere secure but not inaccessible. If no one knows where the documents are, they cannot be implemented after your incapacitation or death, making them difficult or impossible to follow. It can also be helpful to list the names and information of the professionals you worked with to create the estate plan.
Q: What Are the Six Basic Steps to the Estate Planning Process?
A: The common steps in planning your estate include:
- Completing an inventory of all your assets and debts, including valuing your estate
- Determining your goals for an estate plan and the needs of your intended beneficiaries
- Naming the beneficiaries of your assets and the executor and trustee to distribute those assets
- Listing your wishes for end-of-life care and creating powers of attorney
- Reviewing the estate plan with a professional to make it legally sound
- Updating the documents as your life and wishes change
Q: Who Should Be Consulted to Help With Estate Planning and Writing Wills?
A: Many professionals can help with the process of estate planning. Financial professionals can help value your estate and its assets, and tax professionals can help minimize gift taxes and other financial impacts on beneficiaries. Real estate professionals can help you determine how to handle and distribute your property. An estate planning attorney can help ensure that a will or estate plan is legally enforceable and has the resources necessary to work with financial and real estate professionals.
Determine Your Goals
Contact the attorneys at Stange Law Firm to determine how to create an effective estate plan.
