Roughly half of Americans don’t have a will, so if you’ve already taken this vital step to protect your assets and successors then you’re already a step ahead. 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.
An estate plan is a more comprehensive way than a will to instruct 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.
4 Important Items to Consider When Creating an Estate Plan:
1: Do you have or are you expecting children/grandchildren?
As you walk through appointing a guardian to take care of minor children, consider appointing a conservator who will manage any assets your successor(s) will inherit when they reach the proper age.
You may have assets that already contain a beneficiary designation such as a transfer on death (TOD) account. If not, then your will may be used to instruct who will receive such assets.
2: 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.
3: Consider your digital information
In today’s digital age, it’s important to consider 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 complicated and difficult 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.
4: Location and size of your estate
The Tax Cuts and Jobs Act of 2017 doubled the size of the federal estate tax exemption to $11.2 million for a married couple. That means unless your estate is larger than $11.2 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.
There are many aspects to consider when creating an estate plan and a will. There’s no reason to try to figure it out alone. We’re here to help you plan and protect your legacy. If you’d like to schedule a consultation to learn more, contact us at 718-979-7477.