Roughly half of all Americans don’t have a will, so if you’ve already taken this vital step to protecting your assets and successors, then congratulations are in order, you’re already ahead of the curve! While a will is a necessary document that every person who owns assets should have, it is still a relatively simple document that may not cover everything you want it to. You may want to consider creating an estate plan that involves the use of a living trust, plus other important documents like a power of attorney for finances and health care directives.
To over-simplify it, an estate plan is more comprehensive than a will and provides instruction on how your estate is to be distributed after your death, and how your assets should be managed if you become disabled and unable to make financial or health care decisions. Estate plans can save you and your successors substantial amounts of money in court costs, legal fees, and taxes.
Although managing these details can seem daunting, and even depressing, the task becomes far less unpleasant with proper understanding and planning. You should consider the following four items when creating an estate plan:
- Do you have, or are you expecting children/grandchildren?
This is one of the most important factors to consider when creating an estate plan. Beyond appointing a guardian to take care of minor children, you may also need to appoint someone to manage the assets a minor or disabled individual will inherit.
- Minimize probate and maximize privacy.
An estate plan that uses a living trust will allow your heirs to move through the administration process as quickly and efficiently as possible. With only a will, a process called probate must be used at your death. Information brought forward in probate court is public knowledge, and all of the terms of your will plus the assets you own will become part of the public record. Also, probate can be very expensive. Even an uncontested probate could take longer than a year to pass through probate court and attorney’s fees and court costs can start to add up. Constructing an estate plan with an attorney before probate can help avoid most of these costs and loss of privacy.
- Consider your digital information.
One thing that’s often forgotten, but necessary in today’s digital age, is what happens to your online information after you die? Many of our day-to-day activities are conducted online, and this may present issues for your family after you die. For example, if you invest or bank online, it can be an incredible hassle for your heirs to decode your online financial life. Consider storing your passwords in a safe place and then give access through a power of attorney to someone you trust who will be able to help your family manage your online footprint. An estate planning attorney will be able to sit down with you and go through your online accounts and help you decide which ones will need attention in the event of your death or disability.
- Location and size of your estate.
The Tax Cuts and Jobs Act of 2017 doubled the size of the federal estate tax exemption. For the year 2020, unless your estate is larger than $11.58 million, you may be exempt from paying federal taxes on it. However, depending on where you live you may be subject to state-level estate taxes. There are currently 17 states, and the District of Columbia, that impose some sort of estate or inheritance tax.
In summary, a Will does not help an estate avoid probate and has no legal effect until death, therefore, it cannot help manage your affairs in the event you are incapacitated.
If you have been avoiding planning for your family and future, don’t put this off any longer. Proactive planning makes the process less stressful while increasing your options than if you were to wait to make these important decisions during a crisis.
In all areas of our planning, we take a comprehensive approach to help clients care for their families upon their disability or death. We can help you understand what factors to consider when constructing an estate plan and navigating the complexities to ensure proper planning and peace of mind.
Contact our office at 314-872-3333 and schedule a free 30-minute consultation to discuss how best to protect your legacy.