Estate planning, or the lack of it, affects nearly everyone.
Your estate is basically the total of everything you own. This includes everything you can imagine such as cars, homes, additional real estate, all bank accounts, investment accounts, life insurance, and any other personal possessions. Combined they equal your estate and should be part of an estate planning process.
Estate planning is a plan of action for when you are no longer able manage your own affairs because of either incapacitation or death. When you are no longer able to control your activities, estate planning helps you direct how your assets are managed or given to family, friends or organizations and charities you care most about. Estate planning ensures your wishes are carried out by stating specific instructions about what to do, when to do it and to whom. An effective estate planning process will do all of this with lowest possible cost in terms of legal fees, taxes, and courts expense.
Estate Planning Is Simply Making A COMPLETE Plan
Estate planning is making a plan in advance for passing of your assets. However, estate planning can, and probably should encompass much more. Consider the following things thoughtful estate planning can do –
- If you are disabled prior to death, you can document specific instructions for your care.
- For minor children, identify a guardian and an inheritance manager.
- Provide for special needs family members with no disruption of government benefits.
- Provide a structure for loved ones who might be irresponsible with money.
- Provide for loved ones who may need future protection from creditors or divorce.
- Include insurance for a variety of needs –
- Include life insurance for your family at your death
- Disability income insurance to replace your income if you can no longer work because of illness or injury
- Long-term care insurance to help pay for your care during an extended illness or injury.
- Provide for the transfer of your business as a result of retirement, disability, or death.
- Minimize taxes, court costs, and eliminate unnecessary legal fees.
- Estate planning can be an evolving plan because it can be adjusted as family and financial situations merit.
Estate Planning Is For Everyone
Estate planning is not limited to “retired” people. In fact, because we can’t predict how long we will live or what illness or accidents might be in our future, estate planning is something that is better done sooner rather than later.
Also, contrary to popular belief, estate planning is not just for wealthy people. In fact, effective estate planning often means more to families with modest assets, because they can benefit more from avoiding unnecessary taxes, fees and court costs. Wealthy people may have more assets to consider when estate planning, but for people of lesser means, each dollar conserved is more significant.
Many People Are Not Aware Of Estate Planning
People often put off estate planning for a number of reasons. Often people think they do not own enough, they are too young, they are too busy, think they have plenty of time, they are uncertain of what to do and do not know who can help them. The problem occurs when something unexpectedly happens to them, their families are left to make sense of what is left behind.
Proper Estate Planning Can Avoid Court Involvement In Beloit WI
If You Are Disabled
Think of it. If your name is on the title of any asset and you cannot conduct business due to mental incapacity, only a court appointee can sign for you. Your family will have no control of your assets. The court will control how your assets are used to care for you through a guardianship. All proceedings are open to the public and they can be expensive and time consuming. And, if you recover, it can be difficult to end.
When You Die
If you die without estate planning, assets will be distributed according to the probate laws. For example –
- If you are married, your spouse will receive your estate.
- If this is not your first marriage, your children could end up with nothing.
- With minor children, the court will control their inheritance.
- If both parents die such as in a car accident or a plane crash, the court will appoint a guardian without knowing your preferences.
When considering these options, most people prefer to have their business handled in a private manner and certainly not by the courts. Estate planning gives you privacy, control and if you have minor children, allows you to specify to the court who will raise them if you are unable.
Estate Planning Starts With Either A Will or Living Trust
An important part of estate planning is to have a will. A will details your instructions about your estate, however, it does not avoid probate, where the court system, not your family, controls the process. All assets you own and are directed by your will must, by law, go through the probate process prior to distribution.
Should you own property in other states, your family likely will go through multiple probates. Each state probate process will have its own set of laws. The probate process can vary from state to state and expenses can mount with court costs, legal fees and executor fees. Depending on circumstances, probate can last from nine months to several years. Further, probate files are open to the public.
Exceptions To Probate
Jointly-owned property and assets with named beneficiaries such as life insurance, IRAs, 401(k)s, annuities, and so on are not controlled by your will. Usually, probate is not required for these assets to transfer to the new owner or beneficiary. But there are exceptions –
- If a valid beneficiary is not named or has passed, the assets will have to go through probate and be distributed with the rest of your estate.
- If a minor is named as a beneficiary, the court may require a guardianship until the minor is an adult.
Revocable Living Trust – A Key In Estate Planning In Beloit WI
A revocable living trust as part of estate planning allows you to avoid probate at death. It can also prevent the court from controlling your assets when you are incapacitated. A revocable living trust collects many of your assets together into one estate planning process. The result will be privacy, a valid plan allowable in every state and can be amended as needed.
A trust, if you choose, does not die with you. Assets can remain in a trust managed by a trustee of your choice. This arrangement can remain in place until the beneficiaries reach the age you deem appropriate for inheritance. Trusts can be designed to provide for an individual with special needs, or protect assets from irresponsible spending, and sometimes creditors.
Estate Planning Helps Organize Records, Titles and Beneficiaries
Does your spouse or family know where to find your financial records, titles, and insurance policies if needed? The estate planning process helps organize records, locate titles, define beneficiaries and identify and correct errors.
Attention to detail in estate planning ensures your good intentions are carried out. An innocent error can create problems and unneeded expense at your disability and/or death. Be sure beneficiary designations are up-to-date and valid. For example, naming an incorrect beneficiary on a tax-deferred plan can lead to expensive tax consequences. Taking the time to double check and correct these details eliminates confusion and is much less expensive than paying an attorney to fix things after the fact.
Estate planning does not have to be expensive
Estate planning starts with the basics. Be sure the following is in order –
- A will
- Term or whole life insurance
- Powers of attorney for your assets
- Powers of attorney for health care decisions
- From these foundations, expand your estate planning as needs and financial situations changes
- Use an experienced estate planning attorney for direction and to be sure documents are prepared properly. If things are done incorrectly the cost can be great. Don’t try to do this yourself to save money.
The Best Time For Estate Planning Is Now
Thinking of the “end” is not a comfortable feeling. However, without proper estate planning, your inaction will lead to confusion, increased anxiety and make the loss your loved ones will be dealing with worse.
The prudent thing to do is to put something in place now. Changes can always be made. Estate planning is an ongoing process because life always has twists and turns to be accommodated.
Estate Planning Is Peace Of Mind
Monahan and Johnson S.C. in Beloit WI are experienced estate planning attorneys and are able to assist you in managing the estate planning process.
Monahan and Johnson S.C. offers free initial consultations to Beloit and Janesville WI area residents. You can meet one-on-one with our experienced estate planning lawyers.
Call or email Tom Johnson today at 608-362-8086 for more insight about how to protect your assets through estate planning in Beloit WI.