Do you have an estate plan? If you don’t and you’re in the US, you’re one of the more than half of Americans who doesn’t have a will. However, this isn’t something you want to sweep under the rug. You should prioritize drafting an estate plan for your personal assets. And when you do, you will doubtless have some estate planning questions.
Estate planning comes with many benefits for you and the people around you. With a solid estate plan, you’re more likely to save your family from the long probate process and estate taxes. In this article, we’ll answer the 7 most common estate planning questions so you can get started on your estate plan today.
Estate Planning Question 1: What Is Estate Planning, Exactly?
Naturally, this is the first question that most individuals ask when they’re approaching estate planning. In a nutshell, estate planning is the process of preparing how you want your stuff (real estate, bank accounts, etc.) handled when you became incapacitated or die. Through a proper estate plan, you get to decide who will get what personal property.
The main tasks during an estate planning process involve drafting a will and other estate planning documents. Here, you state how you would want your family business and estate assets subdivided among potential heirs. You can also develop a life insurance plan to safeguard against your estate assets.
However, estate planning can affect your state affairs during your lifetime. You have the opportunity to choose a revocable living trust or a representative to make key decisions on your behalf if you become incapacitated. That way, if something happens and you’re unable to advocate for yourself, your past self will have already put things in order.
Estate Planning Question 2: Do I Need an Estate Plan Yet if I’m Not Wealthy?
Even if you’re not rich or in a good financial situation, you need to draft an estate plan for the property you own! It is important to draft an estate plan for the following reasons.
State the Intended Beneficiaries for Your Assets
Drafting an estate plan gives you the freedom to determine the inheritors of your estate. With a list of potential beneficiaries at your disposal, you have a great opportunity to allocate each individual their fair share and leave out anyone you wish. Only those individuals or parties mentioned in your will shall receive portions of your financial assets and trust assets.
So, who might make it onto your list? Such individuals may comprise your immediate family or your extended family. Every individual situation is unique. If you have limited family members, you can choose friends, charities, or nonprofits to inherit your property.
Save Your Family from Stress and Disputes
We all know the agony that one’s family faces when they die. When someone dies without a reliable will, it adds stress to an already horrible situation. Apart from mourning, your family then needs to tackle the hard question of how to divide your property.
Do you want to save your family from all this? If so, create an estate plan while you’re still alive and kicking! Estate planning saves your family from many disputes and hardships. They won’t need to worry about the share of your personal property each individual should receive.
Safeguard Your Property against Unwarranted Recipients
Did you know that your property can fall into the hands of unintended recipients if you don’t put together an estate plan? This mostly happens if you die without a will. Understandably, you may not want a section of your property transferred to people you’re not close to.
A distant relative or a divorced spouse shouldn’t acquire your property if you don’t want them to. To prevent this, simply give the relevant instructions in your estate plan.
Choose a Guardian for Your Children
Like all life events, you can’t predict what the future holds. What happens to your minor children if you die of an accident today? Preparation is key when addressing major life events.
You need to choose an individual who will take care of your children if something bad happens to you. It is even recommended that you choose at least two individuals that can serve as guardians to your children, especially if you spend a lot of time with one of the potential guardians and the two of you could potentially be in an accident together. An estate plan helps you plan for every scenario.
Estate Planning Question 3: What If I Die Without a Will?
If you eschew a will, your property will go through intestacy laws if you left behind no will or death benefit. This also happens if the operation of law or beneficiary designations aren’t applied.
With intestacy laws, the court will have the sole mandate of determining your personal matters of estate planning. However, your immediate family will have the highest priority during the administration of assets.
You shouldn’t let your estate fall into intestacy because if you don’t make decisions for yourself, the court will make them for you. You can see how developing an estate plan in advance while you’re still in a proper health condition can help! Don’t let your productive years and investment strategies go to the wrong people.
Estate Planning Question 4: When I Die, How Will the Transfer of Property Happen?
When you die, you can pass personal property to beneficiaries using these methods.
- A valid will: This is a legal document that states how you want your estate distributed. If the court verifies the will you drafted, the will serves as a guide during the transfer of your property. Within the will, you also get to choose a personal representative that will oversee the entire transfer process
- Beneficiary designation: Some of the beneficiary designations during the asset transfer process include death benefits, life insurance policies, and postnuptial agreements.
- Operation of law: This law gives a certain party the right to collect your assets when you die because of the connection you had them. If you jointly own property with a spouse with the right of survivorship, for example, the surviving partner will inherit the property jointly owned.
- State law: If you never wrote a will, California state laws will take effect during the distribution of your property. The court will then decide how your property gets distributed to heirs through intestacy.
Estate Planning Question 5: Why Didn’t I Receive an Inheritance Even Though I Was Listed as a Beneficiary in Another Person’s Estate?
You can pass assets to beneficiaries in many ways. You can inherit property through a:
- State law
- Operation of law, or
- Beneficiary designation.
For the operation of law and beneficiary designation, the will cannot dictate who the actual beneficiaries are. A good example is when life insurance proceeds get passed to the beneficiary of the life insurance policy outside the will during the estate administration process.
You can also miss out on the beneficiary list if proper estate planning wasn’t carried out and the will is deemed invalid. Similarly, when dealing with a conflicted property, you may take longer to receive your inheritance.
Two Common Errors in Estate Planning
Other scenarios that can make you miss out on your inheritance include these two situations, both of which raise some difficult questions and can serve as reminders of how to plan your own estate.
A mother has two children. She promises an equal asset distribution for the two adult children. However, one of the children (her daughter) lived closer to the mother, and all the bank accounts and retirement accounts got registered in her name while she helped the mom to handle various issues. When the mother dies, the daughter will receive 100% of the bank account funds because they got registered under her name.
You promise your nephew that he will inherit your IRA. Despite that, you forget to update the details in the IRA to reflect his name. When you die, your nephew will not inherit the IRA even if you had promised him so. The details in the IRA will not indicate him as part of the beneficiaries.
Estate Planning Question 6: How Can I Encourage My Parents to Create an Estate Plan?
Estate planning is a sensitive topic. Your parents might not want to think about dying, which is understandable! Therefore, when you try reminding them the subject matter of estate planning, it’s important to do so tactfully.
Your parents may also already have an estate plan you don’t know about. Some parents hesitate to reveal their plans, since a section of the heirs may complain if they’re not favored by the estate plan. Parents may also want their kids to rely on their own hard work rather than depending on inheritance for capital gains income or a lump sum to spend as they like.
Despite this, you can and should remind your parents to reveal their estate plan due to the wide array of benefits. You can remind them that a legal plan for an estate can help with:
- Preparing the family for uncertainties and advance health care directive
- Maintaining the unity of the family and passing across unique values
- Minimizing future conflicts due to unclear estate plans
Apply the following strategies to effectively approach your parents:
- Find a good place and time to have this conversation
- Let your parents know you think well of them and want what’s best for them
- Be honest with your parents about the need for an estate plan
- Outline to them the importance of an estate plan for your family
- Offer to help your parents find resources to get them started, especially if they have trouble with technology
Estate Planning Question 7: I Can’t Afford Hiring an Estate Planning Professional. Can I Complete the Process Alone?
Even if you can’t draft the estate plan on your own, it is not compulsory to hire a legal professional or estate planner. In most cases, estate planning lawyers charge high fees based on hourly consultations. You can also incur other unnecessary charges if you decide to seek legal advice and estate planning services from such professionals.
Luckily, there’s a better option for you—seeking the services of legal documents assistants. At A People’s Choice, we can guide you (or your parents) by helping you create the legal documents you need for your estate plan. You can approach us for estate planning documents including:
- A will
- A living trust
- Health care directives
- Durable powers of attorney
- Documents choosing a guardian for your children
- And more!
With our competent team of legal professionals, we can assist with your estate planning documents. To get started, visit us here. You can also call us today at 800-747-2780.
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