Do you have children, elderly parents, a home, or savings? If so, it’s important to have a plan for what will happen in the event of your untimely death or incapacitation. If you think that planning is only necessary for the wealthy with millions of dollars in assets, you should understand that most families need adequate protection after a loved one is gone. Here are five important things you should understand about trust and estate law.
1. A Complete Strategy Involves More Than Just Legal Documents
Although it is always difficult to think about incapacity or death, the truth is that everyone will pass away, and it is better to be prepared rather than leaving your family caught off guard. Educating yourself about trust and estate law is a good start, and completing all of the necessary legal documents is the first step. Beyond documents, it’s also critical to make sure that your assets are owned in the same manner as detailed in the documents. You should also understand the beneficiary designations on your retirement accounts and consider whether you need life or disability insurance.
2. How Your Family Will Be Impacted Without Proper Planning
If proper planning is not done, your family will end up in probate court, which is expensive and time-consuming. The court gets the authority to examine your will, in addition to your heirs and potential creditors. The court takes over and decides how to distribute your assets and pay your creditors without your input.
3. There Are Ways to Avoid the Probate Process
In order to avoid the probate process, you can make specific beneficiary designations for specific assets. For example, you can say that your tax-deferred account or life insurance policy can go directly to the beneficiary that you’ve chosen. Another way to avoid probate completely is to set up a revocable trust. This allows you to transfer ownership of your assets to a trust that details exactly what happens if you are incapacitated or you die. Because this is all contained within one document, you do not need the assistance of a probate court.
4. How to Determine the Best Options for Your Specific Situation
Depending on your situation, for example, if you are married, or you have kids, family organization determines an entire portion of the process. After that determination is complete, it’s necessary to look closely at your assets and think about how to lessen the amount of estate taxes (if any) that your family will owe.
5. It’s Imperative to Routinely Update Your Plan
Considering that your financial and family situation can often change, you should review your plan at least once every five years. You should review your documents, how your assets are titled, your beneficiary designations, and your current objectives and goals. Think about your current situation, determine what would be the most beneficial for your family, and then update the plan as time passes.
If you make it a priority to learn more about trust and estate law, you will have the comfort of knowing that you’ve done everything you can to protect your family in the event of your death or incapacitation.