It's never too early to worry about the future, and estate planning is the single best way to preserve your assets for future generations. Without an estate plan in place, your family will likely need to attend probate court after your death, and state intestacy laws will largely govern the distribution of your property.
If you'd like to control who inherits control of your assets in the event of disability or unexpected death, speaking with a professional about estate planning is potentially the best decision you can make. Take a few moments to learn more about the basics of estate planning and why it's so important.
Estate planning encompasses all the preparations needed to prepare the inheritance of your belongings. Aside from your home, your estate includes assets like vehicles, jewelry, clothing, land, and any investments you've acquired. In addition, the money held in any bank accounts is included in estate planning. Other important aspects of estate planning include minimizing any tax liabilities your beneficiaries will inherit along with the high costs of going through probate.
The single best way to protect surviving family members from time-consuming and costly probate proceedings is to establish a living trust. Unlike a will that's enacted only after your death, a living trust becomes active the moment you sign the paperwork. If you only have a will in place, your surviving beneficiaries will still need to attend probate court when you pass away, and the court will determine the distribution of your estate.
It's possible to avoid probate proceedings altogether by creating a living trust in which all your assets remain private, and when you pass away, your beneficiaries will immediately inherit the various possessions outlined in the trust. Creating both a living trust and a pour-over will is recommended to ensure all assets are accounted for when you pass away. With these documents in place, your loved ones won't need to worry about attending probate court, which can easily last months or even years.
Since it's impossible to predict the future, the best time to start thinking about estate planning is right now. Even if you only own one home and have few other assets, an estate plan can drastically simplify matters for surviving family members when it's time to distribute your possessions. It's especially important to consider estate planning when your assets are spread among many investments and properties, or if you have many beneficiaries who will each inherit a share of what you leave behind.
It can be difficult to understand the many complexities of estate planning and it's not unusual to feel a little overwhelmed. Be sure to discuss any concerns you have with a financial advisor for additional guidance. Here are a few common questions people have about how estate planning works.
Included in an estate plan are provisions for managing assets on behalf of a minor. Conservators will manage any finances or assets assigned to the child until they reach legal age, usually between 18 and 21. At that point, management of any property, money, or possessions held by the conservator will transfer to the beneficiary.
A will is a document that clearly defines the distribution of assets upon your death. It's important to note that, unlike a living trust, a will does not address what happens to your assets while you are still alive. While creating a trust is often more expensive and complex to set up than a will, you have the option of including instructions for distributing assets in the event of incapacitation, severe illness, or disability.
Since estate planning encompasses the management of everything you own — both before and after you pass away — the cost of setting everything up will be higher than simply creating a will or a trust. At the same time, estate planning can potentially save your loved ones an enormous amount of money on court costs, not to mention the lost time spent navigating the probate process.
If you need help navigating the intricacies of estate planning, let our experienced team at Davis Wealth Services put things in perspective. We will walk you through the best options for your unique situation, ensuring your wealth and assets remain protected for future generations. Talk with us today to book an appointment!