Estate planning refers to putting affairs in order to ensure valuable assets are protected in the event of death. Estate planning is particularly important for individuals with minor children, as guardianship is established through a last will and testament.
Several estate planning strategies exist and will vary based on estate value, types of assets, and whether the estate will pass through probate or be protected by a trust. At minimum, individuals should execute a legal Will, healthcare proxy, and durable power of attorney.
Drafting a last will and testament is not difficult, but does require careful thought. The Will can provide directives on funeral arrangements, guardianship, and distribution of inheritance property. It can also be used to disinherit direct lineage heirs.
Wills should be updated and changed over time. An estate administrator is designated within the Will. This person is often a spouse, adult child, family member, close friend, probate lawyer, or estate planner. Estate administrators must be at least 18 years old and never convicted of a felony. It is best to appoint someone who can make sound decisions under difficult circumstances and who is good with finances.
Estate administration duties can be cumbersome and require close attention to detail. Administrators can work with a probate attorney to assist with filing court documents and various estate administration duties. Estate administrators are compensated for their duties and are not financially responsible for any debts or expenses related to settling the estate.
When estates are not protected by a trust they must undergo the probate process to ensure the estate is settled according to state probate laws. The average duration of probate extends for 6 to 9 months. Much depends on court caseload and the complexities of the estate.
Probate lawyers can help individuals establish a last will or trust. Trusts require additional paperwork as valuable property must be transferred to the trust. People often use trusts to maintain their privacy and to expedite estate settlement procedures. Probated Wills are a matter of public record, while Wills protected by a trust remain private.
Establishing a healthcare proxy ensures you receive or don’t receive medical treatments. Healthcare proxies allow individuals the opportunity to express their desires for medical care should they become incapacitated and unable to speak for their self. Directives can include do not rescesitate orders, and whether to provide life-saving nutrition or life support measures.
Granting power of attorney rights authorizes another person to act and make decisions on your behalf. This person can have access to financial accounts and has the authority to sell real estate, motor vehicles, business assets, or anything else you own. The designated agent should be trustworthy and capable of acting as fiduciary on your behalf.
Many people believe estate planning is reserved for the wealthy. Nothing could be further from the truth. Regardless of net value, estate planning does much more than protect inheritance property. It ensures your loved ones don’t have to deal with the complications of settling a probate estate without a Will and informs loved ones of your final wishes.