Estate planning is a big deal and there are a lot of questions often left unanswered. In this post, our experienced estate planning attorney answers the five most common questions about estate planning.
1. What is an Estate Plan? And Do I Really Need One?
An estate plan includes various documents that detail who is responsible for your assets and debts after you pass.
Another important part of an estate plan is that it designates someone to make medical and financial decisions on your behalf in the event you become incapacitated. If you have children under the age of 18, it also names who you'd like to gain guardianship over them.
Sounds pretty important right? We promise it is. You aren’t legally required to have one, however, we can’t stress the importance of an estate plan enough. A complete plan will tremendously help your loved ones, mentally and financially. Plus it’s the only way to guarantee your assets get passed to the right people.
2. What Should I Include in My Estate Plan?
t’s important to have a comprehensive estate plan so your loved ones get the assets you want them to.
A complete estate plan should include:
A Trust - Trusts give authority to a third party (trustee) to hold an asset (such as a house, car, or sum of money) for the designated beneficiary until they are of age to receive it. Depending on your state, this is either 18 or 21.
Your Will - A will is a legal document that outlines exactly who each one of your assets goes to and how to settle outstanding debt.
Explanatory Letter - An explanatory letter gives loved ones more insight into why each person is receiving specific assets.
Power of Attorney - Power of attorney gives specified individuals authority to make certain decisions on your behalf. This could be medical, financial, or business decisions.
Guardianship Designation - A guardianship designation names someone the legal guardian of any child left behind under 18.
3. How Do I Make Sure My Property Goes to the Right People?
To make sure specific people receive the property you desire, your estate plan must be complete and correct. The easiest way to do that is to hire an estate planning attorney.
If your plan is incomplete or any documents are filled out incorrectly, asset allocation is at the hands of the court.
4. How Is My Property Transferred After My Passing?
If you have a full estate plan, the court will verify your documents, and your property will be distributed to the beneficiaries you named in said documents. However, if no clear beneficiary is designated for certain assets, the property may enter probate. When this happens, the court will assign your property to family members in order of relation.
5. What Happens if I Die Without a Will?
A will is the primary document for dedicating your property. If you die without a will, the court will decide who gets each asset (as mentioned above).
A will is an important part of any solid estate plan, as it designates where your assets will go after you pass away. Comparing a will to an estate plan is like looking at one piece of a large puzzle – you can't have an estate plan without a will.
It’s best to start your estate plan as soon as possible to make things easier for those who survive you.
6. Can I Write My Own Estate Plan?
You can write your own estate plan, but not alone. While most states don’t require your documents to be officially notarized, a few of the documents must be signed in the presence of two non-beneficiaries who also must sign them.
If you do write your own estate plan, we recommend having it checked by an estate planning attorney. This ensures everything is correctly filled out and that all necessary documents are present.
Failure to have a correct and complete plan can cause delays in asset distribution that can last many months. Also, some of the things you leave behind may not go to the person you intend.
7. When Should I Update My Estate Plan?
Depending on the rate at which you acquire assets, you should update your estate plan every one to five years.
A few times you should update your estate plan include:
Buying a new car
Having children (or adopting children)
Opening a new business
Making new investments, such as purchasing stocks or opening a retirement savings account
Updating your estate plan is significantly easier than making it, so doing this every few years should be a simple process.
Questions to Ask an Estate Planning Attorney
Hiring an experienced attorney is the best thing you can do when setting up your estate plan. To help you find the best attorney, here are some questions you should be asking.
How long have you been practicing?
Do you conduct periodic estate plan reviews?
What is your experience with estate planning?
How will I be billed?
How long will it take to finish my estate plan?