What is Estate Planning?
Estate planning helps seniors detail their final wishes and ensure they are carried out once they are gone. Many people consider what they will leave behind for their loved ones, and proper estate planning can help get things in order. For example, with estate planning, seniors can do the following:
- Determine who receives what and set some conditions before beneficiaries can receive their assets.
- Name a guardian for minor children.
- Expedite the probate process, which is expensive and time consuming.
- Set up a plan that ensures family and beneficiaries with special needs are taken care of following your passing.
- Use special instruments, like living trusts, to ensure beneficiaries receive their inheritances quickly.
- Detail instructions for medical care should you become disabled or incapacitated.
- Transfer a business.
- Empower someone to carry out your final wishes.
Estate planning helps seniors get their affairs in order before these difficult decisions have to be made by a court or between family members.
Who should consider estate planning?
Estate planning isn’t just for seniors, because whether you need one or not is situational. For example, if any of the following is true, then an estate plan will be helpful:
You own a business
Businesses complicate the probate process, and without a plan in place, it may not be clear who is to oversee operations. Further, without an estate plan, it may not be easy to ensure the business has the financial assets it needs to continue operating. Estate planning can clear both up, so there is a clear direction for the company after you are gone.
You have a large estate
Extensive estate planning isn’t necessary for younger people with few assets, but seniors with more to their name need more than a simple will. During estate planning, additional tools, including living trusts, are available to ensure timely transfer of assets. This is helpful for larger estates, as probate can take months or years if there isn’t a plan available.
Estate planning can help families reduce or avoid estate taxes as well.
You have significant medical conditions
Estate planning doesn’t just concern what happens after you pass on. It also details your wishes while you are still alive, including how your medical care should be arranged. If your health is in decline or at risk of decline, an estate plan ensures you are taken care of should you become incapacitated.
You want to keep your estate’s affairs private
During probate, the court determines which assets are passed on to whom, and if there isn’t a guiding plan available, this process can be greatly drawn out. That’s a concern for many seniors, as information generated by the probate court is publicly available. That means anyone can access information regarding beneficiaries and assets.
You believe there could be conflict related to your estate
If there is a risk of infighting between family members after your passing, an estate plan makes it extremely difficult for bad actors to challenge your wishes.
Even if none of the above apply to you, a simple will is still recommended for most families, as it clears up important concerns like guardianship.
What happens if I don’t have an estate plan in place?
If you don’t have an estate plan, once you pass away, the state determines who receives the assets from your estate. This is known as intestate succession and depends greatly on whether you have a spouse and/or children. For example, if you live in Texas, are married and have children with the person you are married to, all of your “community property” and 1/3 of your personal property is given to your spouse, and everything else is split among your children. In this context, community property is generally any assets you or your spouse acquired after marriage.
This situation gets much more complicated if you have children with someone other than your spouse, or if there are adopted children present. If you have no children, but living siblings, some of your assets will be given to your siblings, even if you are married.
This may not be the way you would prefer to split your estate’s assets, but this is what Texas will default to. Seniors that would prefer a different approach should consider an estate plan.
Who can help with estate planning?
State law has a lot of influence over what you can and cannot do with your estate plan. For this reason, it is recommended that seniors consult with an estate planning lawyer, which can help with the following:
Ensure your plan is actionable within your state’s legal framework
There are many simple mistakes that can invalidate a plan. For example, if you name an executor who lives out of the state, they may have no authority to act on your wishes once you pass. An estate planning attorney helps their clients avoid these common mistakes.
Reduce the cost of executing your plan once you pass
If there are problems with your estate plan, the cost of fixing it will fall to your loved ones. An estate planning attorney ensures the plan is put together properly the first time, so there are no unhappy surprises when your family acts on it.
Help better sort out assets and major questions
There are many types of assets that people acquire over their lifetime, and each one has legal limitations on how it can be handled in an estate plan. Estate planning attorneys help their clients arrange their assets so they are not tied up when beneficiaries need them. Further, if there are major concerns, such as guardianship or business ownership, an estate planning attorney can provide valuable guidance on how to proceed.
Estate planning offers peace of mind to seniors and guidance for their loved ones. Putting together a plan that observes your state’s laws, though, can be a challenge, but an estate planning attorney can help steer their clients through the process.