I have seen countless estates administered, some with pre-planning in place, others without it. Without exception, estates without planning in place are costly, time-consuming, and generally stressful to administer. Estates that have been properly planned, on the other hand, can be administered much more easily, much more quickly, and nearly always less expensively.
In addition to time and cost savings, some of the benefits to planning one’s estate include:
- The ability to name the people to whom you wish to give your assets and know that your wishes will be carried out;
- The ability to arrange your estate so that it pays as little in estate taxes as possible; and
- The satisfaction of knowing that your financial affairs are in order and that you’re not bequeathing a costly administrative nightmare to your loved ones.
Having a basic estate plan in place is important, regardless of your net worth. Such a plan ensures that your family and financial goals are met after you die.
An estate plan has several elements: a will, power of attorney, and an advance healthcare directive (medical power of attorney). For most people, a trust and life insurance also make sense.
The first step in planning your estate is to take an inventory of your assets. Your assets include your investments, retirement savings, insurance policies, and real estate or business interests. Once you have done this, decide how you would like your estate distributed and whether you would like to place any restrictions or conditions on the distributions.
If you have minor children, it is always wise to have a Will, even if you have a Trust as well, as a Will is the best place to name your children’s guardians.
In addition to the basic estate planning documents that everyone should have, Living Trusts (also known as Revocable Trusts) are also wise to consider. Living Trusts are legal mechanisms that let you put conditions on how and when your assets will be distributed upon your death. Unlike Irrevocable Trusts, Living Trusts allow you to continue to have complete management power over and access to your assets during your lifetime. Upon your death, the terms of your Trust will govern the distribution of your assets. By using a Living Trust, your heirs will most likely save significant time and money in administering your estate.
If you would like more information regarding setting up an estate plan, please give us a call to schedule an appointment for a free consultation.
