Generally speaking, it’s a good time to plan your estate when you own property, stocks, or other valuable collector’s items. Whether young or old, if you have something of worth that you would like to pass on to a beneficiary, estate planning ensures your belongings go to the intended recipient. But what, exactly, is estate planning? At Morris Hall, we’re here to help.
Understanding Estate Planning
Estate planning includes numerous legal documents, such as a will, power of attorney, and/or a trust.
- Will: A legal document that dictates beneficiaries of your assets after your death. A will can also state who will care for your minor children in the event of your death. Many people use a will to outline the specifics of their funeral as well. A will can be updated numerous times, which is why you may be familiar with the phrase, “last will and testament.” This is used to indicate a will as your most recent draft in order to avoid confusion. Reasons for updating a will may include acquiring more valuable assets or wanting to bequeath assets to additional beneficiaries. Additionally, some people update their will to name a new guardian for their dependents
- Power of Attorney: Gives a third party power to make financial decisions on your behalf in the event you’re unable to do so. This individual can access your accounts to pay bills and/or debts and make business decisions in your name. You can also give power to a third party to make medical decisions for you if you’re incapacitated.
- Trust: There are various types of trusts, and the experts at Morris Hall estate planning can help determine which is the best for you. Benefits of a trust include designating an individual to manage your assets and bypass or reduce taxes to be paid by your beneficiaries.
Benefits of Estate Planning
It’s never too soon to think about the future, but what are some of the specific benefits of estate planning?
- Asset Protection – If you die without legally spelling out what happens with your assets, you run the risk of losing everything to the state. Your home, investments and valuables will not be the subject of a lengthy legal battle when you have proper estate plans in place. As a result, they will not lose value, and they may also avoid excessive taxes to be paid by your relatives.
- Designates a Special Co-Trustee – When you create a will and/or a trust, you can name an executor or special co-trustee. This third party individual assumes responsibility for your estate, including financial accounts, and can make decisions on your behalf in the event you become unable to, or you die. Having someone to serve as a mediator or final decision maker can ease the distress of your loved ones after your passing. The special co-trustee can make sure your assets are divided or bequeathed as you indicate in your will/trust, avoiding probate.
- Avoiding Probate – What is probate? It is the period of uncertainty that many people face after the death of their relative or loved one. Without a will or trust to spell out the beneficiary of your valuables, the courts take possession and begin the probate process. Everything is in limbo until the courts decide who receives certain assets, or who should become the new guardian of minor children.
- Establishing Beneficiaries – As mentioned above, beneficiaries are the individuals who you intend will receive your assets. Whether in the form of property, money, heirlooms, etc… estate planning takes the guesswork out of this process and can help the beneficiaries avoid probate.
- Maintaining Privacy – Did you know that if you only have a will for estate planning, the information can become public knowledge? There isn’t as much privacy for the proceedings in comparison to a trust. Well-rounded estate preparation can offer more privacy for your legacy and for your beneficiaries. Many trusts can be in the name of a third party trustee, keeping your identity private during and after your lifetime. As a result, the transfer of certain assets, such as real estate property or bank accounts, does not have your name attached to it in public records.
The benefits of estate planning early may mean more to those you leave behind, which is the type of legacy for which we should all aim. Lift the burden that could potentially be felt by the ones you love and let us help you with your planning today.