Tips For Creating An Estate Plan
An estate plan is something that everyone should have. However, creating one is very similar to going to the gym. We know it’s good for us, we want to go, but we never make the first move. Why? Because we fear the unknown, we are lazy and don’t quite understand how important an estate plan is for us. Luckily, creating an estate plan is much easier now than in the past. Your estate law attorney or certified estate planner can help you create the perfect estate plan to protect your assets and your interests. Having a good estate plan is also a great way to protect your loved ones and make sure there won’t be any legal issues after your passing.
Here are some important steps for creating an estate plan
Estimate Your Total Net Worth
This is the first thing you’ll need to do. Try to estimate your total net worth and the assets you will distribute in your estate plan. In order to properly determine your net worth, you must include all of your assets. This means personal property, investment and saving accounts, retirement plans, life insurance and death benefits, business interests, money owed to you, mineral and oil right and real estate. You’ll have to include everything you own, so try to remember every item or asset. Of course, you will also have to include (or to subtract, more precisely) the liabilities, debts, mortgages, ongoing loans and credit card debt.
After you establish your net worth, you will need to determine whether you owe taxes for your assets. The taxes can be either federal, state or county, so try to determine how much you owe. Also, pay attention to the possible inheritance taxes and how you can lower them. Talk to your certified estate planner or estate law attorney to learn more about this important aspect.
Understand Your And Your Family’s Need For An Estate Plan
Estate plans are not only for wealthy individuals. Every person should have one in order to protect his or her family’s interests. Even if your estate isn’t close to the federal or state tax limits, there are other benefits for an estate plan. For instance, the probate process is very difficult, time-consuming and expensive. If you have an estate plan, you can easily avoid the probate process, saving a lot of time and money for your family. An estate plan is very beneficial if you are a business owner or expect a future inheritance. Estate plans can include provisions about the management of your assets in case you are incapacitated and can help you avoid a lot of legal issues.
Find A Good Estate Planner
Don’t try to create an estate plan all by yourself. The laws are very complex and often change, so it’s very difficult to include all the provisions you want. You will need professional help, either from a certified estate planner or from an estate law attorney. These professionals will help you create a plan that really works for you and your family. They will be able to give you advice – what to include, what to not include, what to focus on, what to avoid and so on. You will also get advice on how to lower the inheritance taxes and to manage your estate for the long term.
Do You Need A Will Or A Revocable Living Trust?
Once you have a professional by your side, you can go to the next step. You will have to determine if you need just a simple will and a testament or if you need a more complicated revocable living trust. Your estate lawyer will explain the difference between these two documents and determine whether they match your needs.
What Happens If You Become Incapacitated?
This is another important step for estate planning – what happens if you become incapacitated? Your estate plan must include a complete disability plan that will include provisions for the management of your estate. If you don’t include a complete disability plan, your assets will go into a court-supervised guardianship or conservatorship and your family will lose control of them for years to come. This may cause immense legal and financial issues for you and your family, and very stressful situations.
What Happens After You Die? The Plan
As soon as you have a complete disability plan, it’s time to create a plan for what happens after you die. You will have to decide who inherits what and when they will get it. Obviously, this is your choice – only you can do it. You can ask for advice from your estate lawyer, but it is your decision, in the end. Once you decide who you leave the assets to (family, friends, business partners, charities), it’s time to make the final plan.
Keep in mind that the rules of inheritance are very different, depending on your personal situation. For instance, if you are married, your wife or husband is entitled to a large chunk of your estate. You cannot completely disinherit your spouse in virtually all states in the United States (Georgia is the only state that allows it – because it doesn’t have an elective share law). Also, you should talk with your estate attorney and see what are your options when it comes to estate tax planning.
Review And Update The Plan
If you completed all the steps listed above, you are almost done. Almost… – why? Because a good estate plan is never “done” or “completed”. Things happen in our lives every day and they can have an impact on our estate plans. The estate plan you create today may be obsolete in a couple of months, or even tomorrow. Your life can go through a multitude of experiences that change your marital status, your net worth, and your medical condition. For instance, a person can marry, divorce or move across states or across countries, in just a year. Or you can win the lottery, or you can inherit a small fortune from a distant relative. Your financial situation can change every day and every aspect should be included in your estate plan. Always make sure to keep your estate plan updated.