Leaving this world when you want to is not in your hands. However, ensuring that you leave this world with all your matters cared for is something you can control through estate planning.
Estate planning is the way of the living to make preparations for the future, a future in which they may or may not be present. This not only concerns the well-being of your family but also sees how and by who your assets and investments are cared for when you die. But for your estate plan to carry out the objectives you have in mind, it is integral for it to have all the necessary components that make it complete.
Each estate planning attorney has their own set of rules for an estate plan. However, there are some components that they just can’t ignore. Keep reading to get a comprehensive understanding of your estate planning must-haves that are a foundation of a downright estate plan regardless of the trust attorney you choose.
What is estate planning?
Estate planning refers to a planning process that revolves around an individual’s finances and how they will be dealt with after their death. This includes but isn’t limited to the allocation of assets to the applicants chosen by the individual, settlement of debts, payment of estate taxes, guardianship decisions regarding children or pets, and other considerations.
Estate planning is an individual’s decision of how their lifetime accumulated wealth and assets will be passed onto specific inheritors. These decisions are shared with an estate lawyer or probate attorney with significant estate law experience and concoct your estate plan.
Without estate planning, your hard-earned wealth or assets will become subject to the court, which decides their ownership. Court matters take years to settle and afflict the deceased’s family with rigorous complications. Moreover, your possessions can land up in probate if things take a downturn. This means they will be sold even if you plan to pass them on to your heirs, and the earnings will be divided between all the inheritors.
Devising an all-inclusive estate plan lands the ball in your court. You get to decide all matters regarding your financial situation and how they will be distributed between your family members.
Estate Planning Checklist: Everything Your Estate Plan Must Include
A comprehensive estate plan benefits your family’s future and peace of mind. Planning it alone may feel like getting stuck in the tangles of a spider’s web. This is where an estate planning attorney comes into the picture.
Not only do they direct you in the right direction, but they also inform you about priceless strategies that make your estate plan organized without missing out on essential details.
Relying on your estate lawyer alone is never a good option. There are some estate planning must-haves that you need to know about to ensure your estate attorney is taking you on the right track.
For this reason, we have prepared an estate planning checklist highlighting all the major essentials of an estate plan. If your estate lawyer is missing any of these requisites in their plan, you may need to change your lawyer.
A Will
A will is a legal document prepared by an individual that states their plans for their family and estate in case of death. A will holds all the details about an individual’s asset distributions, and these settlements only come into effect once the individual dies.
Having a will in your estate plan saves your family significant time, money, and conflicts since you have already made decisions regarding who gets what and how their future expenses will be handled. Without a will, your estate goes under the court’s authority.
Thus, the state in which you’re living gets to decide how your assets are distributed among your family members or other beneficiaries. As a result, your family has to fight in court for ownership of your assets, a process that can get very ugly.
When a person choses a Trust plan, the will acts as a catch-all. Any asset not already in the trust is transferred to the trust after death.
Three Terms You Must Know When Making A Will
- TESTATOR: The testator is you or any other person creating the will and deciding its contents.
- EXECUTOR: The executor is someone who the testator hires to advise on how to prepare a will. The executor also brings the will’s contents into action when the testator dies.
BENEFICIARIES: The beneficiaries are the testator’s family members or organizations who the testator has mentioned in their will to leave behind his assets or personal possessions.
What Does A Will Include
A will can either be really precise or hold several minor details about how you would like your estate to be managed and your family to proceed without you. However, some of the most common aspects of a will include:
- The executor’s designation who carries out the details specified in the will.
- Name of the beneficiaries and the specific assets they will be inheriting.
- Instructions on how the beneficiaries will receive the assets and the age they will be entitled to them. These instructions could also be regarding the beneficiaries’ future, for instance, arrangements for educating the testator’s children, etc.
Legal Conditions For Individuals Making A Will
Each state has its own requirements for a will. However, some conditions persist in all states. The legal age at which you can set up a will is above 18 years in most states. Moreover, you also have to be of a sound mind when setting up a will.
This means that you must have a clear understanding of what you’re doing. Wills made under threats of violence, or any pressure have no legal binding. It is also necessary for most states for the person making the will to sign it in the presence of two witnesses at least.
A Trust Or Transfer On Death Deed
A trust is a legal agreement where a third party or trustee holds or manages your assets until they are passed onto the beneficiaries. The trustee can be anyone from a person to a firm who you appoint to be responsible for your estate and ensure it’s handled according to the way you have specified.
There are numerous benefits of including a trust in your estate plan. For starters, it helps you save heaps of taxes. A trust cannot be changed once the originators (settlors) pass away, which removes it from the banner of a taxable estate. This way, regardless of when you die, hardly any significant tax payments would have to be made by the beneficiaries.
Furthermore, if you don’t want your heirs or family to be stuck in matters of probate, a trust is a remarkable way of avoiding probate. Thus, keeping a trust is your way of assuring that your beneficiaries can gain ownership of assets much quicker than would be possible through a will.
Other benefits of a trust include complete control over your wealth. You can set precise instructions in your trust regarding your estate plan making specific directives about when and who is a part of the distribution of your assets.
Without a trust, the court gets to handle the inheritance matters of your property. They may not only end up transferring your property to the wrong members but also keep an amount of 10-15% of the gross value of your house for themselves.
In contrast, a transfer on a death deed is a more straightforward process of passing your estate to your beneficiary. A transfer on a death deed only allows the distribution of any real estate property you own. You can simply name the beneficiaries you wish to inherit your properties, and your estate will be passed onto them after your death.
However, if you want to transfer your vehicles, company shares, or any other valuable possession, you would not be able to do so via a transfer of death deed. The primary reason why people use a transfer of death deed for their property transfers is that it eliminates the possibility of your estate landing in probate.
Guardianship Forms
Guardianship involves designating a person to look after your minor children in case of your death. Choosing a guardian is a careful process since you’re basically appointing a person who would be responsible for the upbringing of your children, their education, and health in your absence.
Without the guardianship clarified in the estate plan, the court decides where your child goes. This can lead to a lot of time and money being spent on courts fighting for the rights of your children and in no way guarantees that they will be in safe hands. A guardianship form testifies to who you would like to manage the upbringing of your minor children and ensures your children end up with someone you trust blindly.
How Is A Guardian Appointed?
Before you can appoint an individual as a guardian, they have to acquire an official designation from the court in this regard to have legal standing. The judge analyzes the situation, considering the guardian and the ward and whether the ward actually needs a guardian.
In the case of children, the process is quite simple, but when an adult is in question, the guardian needs to prove to the court through medical or other evidence that the ward requires the attention of a guardian. This procedure can be further simplified by including Guardianship forms in your will. Thus, in case of the untimely death of the testator, the estate attorney can activate the role of the guardian and enable them to undertake their statutory responsibilities.
Durable Power of Attorney or Financial Power of Attorney
A power of attorney is a crucial component of your estate plan. Through a power of attorney you can appoint a person called the “agent” to make decisions in your place regarding all of of your financial matters.
Durable Power of Attorney grants legal authority to the agent you’ve appointed, enabling them to handle your daily financial matters. . A Durable POA can:
- Sign legal documents if need be.
- Decide on your personal financial matters.
- Make financial decisions regarding your business.
Medical Power of Attorney and Living Will
A Medical Power of Attorney is an agent who makes all the medical decisions for you in the situation that you become incapacitated. A Medical POA is always durable and does not come into effect unless you’re seriously ill or incapacitated.
The medical POA also includes a “living will”. These can include decisions regarding giving you pain medicine, whether you wish to donate your organs, whether you want to be laid to rest if you land in a vegetative state, and other plans for when your health is severely affected.
Lessen Your Estate Planning Burdens With Jefferson Estate Planning
Tackling all these estate planning components by yourself and putting them together can be an arduous task requiring years of research. Thus, this work is best left to professionals in the field of Estate Planning.
Jefferson Estate Planning has been a leader in estate planning services in Temecula, Ca, for over 12 years. Get your hands on ready-made estate planning packages carefully tailored by Jefferson Estate Planning to ensure your estate plan includes all the essential components that make an effective estate plan. For more information on these packages and the unparalleled services of Jefferson Estate Planning, click here. You can also get in direct touch with them by contacting them at (951) 553-6832.
