When someone thinks of the word “estate,” they may picture giant mansions and loads of cash. However, estates are not something reserved for the wealthy. Anyone can benefit from establishing a legal estate plan, because estate plans can make it simpler for a person’s wishes to be carried out in the event of their death. Anyone who has a specific idea in mind of what they want to happen to the things they own when they are gone should consider creating an estate plan.
Defining Estate Planning
An estate plan has many elements; however, the basic definition is the process of making formal plans for managing and transferring an estate once the estate holder can no longer advocate for themselves. Different documents and people are required to make estate plans work properly, including but not limited to:
- The will: Wills put into writing who a person wants their assets to go to. They can also dictate who will become the guardian of someone’s minor children if something happens to them, and they can elect someone to become an executor of the estate in that same situation.
- Power of attorney: A power of attorney is someone chosen to make financial decisions for someone if they become incapacitated or die. They can perform actions such as paying bills or making business decisions that involve finances.
- Medical power of attorney: A medical power of attorney can make medical decisions on behalf of someone who has become incapacitated, such as whether to continue treatment.
- Living will: A living will allows someone to put in writing which medical treatments and procedures they would and would not like to be used to keep them living in the event of an accident or other traumatic event.
- A trust: A trust is a legal fiduciary arrangement that allows someone, the trustee, to hold assets in a fund on behalf of someone else, called a beneficiary.
What Purposes Do Estate Plans Serve?
Estate plans serve many purposes; however, most people opt to create one for the following 5 reasons:
- Avoiding probate: When someone who does not have an estate plan dies, a probate will need to take place. A probate involves validating someone’s will after they’ve died, placing monetary values on their assets, paying off their remaining taxes and bills, and giving the rest of their money to their beneficiaries. With an estate plan, all those tasks will be taken care of before death. Probates can also become emotionally distressing on the remaining family members, as people may argue over certain decisions that could have been handled earlier.
- Avoiding mess: When someone who does not have an estate plan passes away, they may leave a big metaphorical mess for their loved ones to clean up. When someone decides who will be in charge if they become incapacitated and who will get what, they avoid forcing their loved ones to make those stressful decisions on their behalf.
- Protecting loved ones: Estate plans prevent people with bad intentions from getting involved in the distribution of someone’s finances after they’ve died. Certain loved ones may be prone to poor financial decision making or may be involved in a nasty divorce. An estate plan will prevent the money they inherit from becoming wasted or stolen.
- Lowering estate taxes: Without an estate plan, a person’s estate may be subject to significant state, federal, and inheritance taxes. Estate taxes can be virtually eliminated by married couples through AB or ABC trusts if included in their wills. Additional estate planning can be utilized by single people to make the taxes on their estates less expensive.
- Protecting assets: We work our whole lives to build our estates and collect our various assets. Estate planning can prevent those assets from being stolen through a lawsuit or from opportunistic family members. An experienced estate planning attorney can help create a quality estate plan.
Creating an Estate Plan
Once someone establishes that they could benefit from an estate plan, they will need to go through the process of creating one. Creating an estate plan can be simple, and the benefits outweigh the effort that it takes putting one together.
Determining Net Worth
The first step in making an effective estate plan that satisfies someone’s desires is calculating their net worth. Someone’s net worth is the total amount of their assets, such as retirement plans, bank accounts, real estate, and business interests.
Assess Everyone’s Needs
Anyone seeking an estate plan needs to decide where they want their assets to go in the event of their death. Assessing what family members could benefit from and which charities they want to support can help make this process simpler. Estate plans are especially beneficial for people who have minor children or properties in multiple states.
Choose an Attorney
An attorney that is experienced in estate planning can be helpful in assisting throughout the process. Attorneys understand the appropriate language to use in documents such as wills and revocable living trusts to ensure they have everyone’s best interests in mind. An estate plan created with legal assistance is far less likely to fail in court. The estate planning attorneys at Katz, Kantor, Stonestreet & Buckner can help give anyone peace of mind through a carefully planned estate.
Create a Health Plan
It’s difficult for someone to decide what should happen in the event they become incapacitated. However, it is an essential part of estate planning that can take a difficult burden from the shoulders of loved ones. A quality health plan will include electing someone to become the medical power of attorney.
Select Fiduciaries
Deciding who will carry out the wishes outlined in an estate plan is an essential part of the planning. Selecting quality fiduciaries is important because if the people chosen cannot perform the responsibilities or do so poorly, the beneficiaries of the estate can bring it to a judge. If this happens, the estate planning that happened beforehand will become irrelevant. An estate plan is only as good as the people chosen to carry it out.
Keep the Plan Updated
Estate plans are akin to a living document. Things happen every day that change people’s lives, and their estate plans must be kept up to date to match the changes that occur in their lives. When a plan is created, it is the ideal plan for that given moment. Over time, preferences will shift, and that ideal plan may not remain so ideal. Going over the estate plan every few years (or annually as a person ages) will ensure that it is as accurate to a person’s wishes as possible.
Contact an Attorney Today
The experienced and compassionate attorneys at Katz, Kantor, Stonestreet & Buckner can help you develop an estate plan that meets the wishes of your family as well as yourself. Preserving your estate is important, but the process can be heavy. Having the support of the largest estate planning law firm in south West Virginia can help put your mind at ease. Let us help you establish a strong family legacy. Contact us today at (304) 713-2014 or through our online contact form.