Bestselling author Jen Lancaster said, “There’s nothing fun about stuff like estate planning, getting mammograms, or talking to a guy about long-term disability insurance, but do it anyway. Trust me, the stress of not having done the above is prematurely aging.” She makes a good point here. While estate planning may not be fun, getting it done gives you peace of mind.

Estate planning is crucial if you want to have a say in what happens to your assets once you’re gone. In this article, we look at estate planning solutions and discover how to tackle them in a less stressful way. First, let’s define the concept of estate planning.

What Is Estate Planning?

In layman’s terms, estate planning is the directive an individual makes for how their assets and properties should be distributed when they die. What makes up an estate? An estate is made up of assets or properties owned by the individual in the individual’s name. These assets include properties such as real estate, building structures, cars, stocks and bonds, insurance policies, jewelry, etc.

An adequate estate plan lays out all arrangements for the management and distribution of the individual’s estate. This plan goes into effect should the individual be unable to make such decisions themselves due to incapacitation or in the event of their death. This preparation often includes asset management and can take many forms. Some people choose to create this with the assistance of an attorney who specializes in estate law, while others do it on their own.

Does Estate Planning Protect Wealth?

The short answer? It certainly can. Many wealth management industry advisors, financial advisors, and estate planning firms advise you to plan your estate because the basic concept of estate planning is wealth protection. It helps to protect wealth in various ways, including lowering estate taxes. We’ll go into more detail in a subsequent section.

The Benefits of Estate Planning Solutions

You already know some of the benefits of estate planning solutions. Here are some of the other reasons why estate owners decide to take the plunge.

Property Management

Estate planning helps in the management of your assets and properties when you are unable to act in that capacity. In situations such as death, incapacitation, or unavailability, estate planning ensures the smooth flow of your property to a new owner in accordance with your stipulations and wishes.

Effective Distribution of Assets without Conflict

Estate planning makes the distribution of a decedent’s assets very easy. The presence of a valid will, trust, or other arrangements make for a great reduction of complexities. The assets will be distributed in adherence to the decedent’s stipulations without any conflict among the beneficiaries. In other words, your Aunt Carol won’t be able to claim more than her fair share of the pie if you have an ironclad estate plan.

Avoidance of Probate

Some forms of estate planning can help to avoid the stress and costs of a drawn-out probate process altogether. A good example of this is irrevocable living trusts and other types of trusts, which we’ll explain in the next section.

Minimization of Cost and Estate Taxes

Effective estate planning helps to reduce the expense of administering an estate. Some forms of estate planning, such as irrevocable living trusts, grantor retained annuity trusts, and others are also targeted towards the reduction of the estate or gift taxes. This goes a long way toward helping beneficiaries to quickly receive their inheritance or gifts with as little bureaucratic red tape as possible.

Protection of Beneficiaries

Another important benefit of estate planning is that it helps property owners plan for the protection of their beneficiaries by making arrangements that ensure that each beneficiary gets his/her share of the inheritance as stipulated by the property owner. Other forms of beneficiary protection include; appointment of guardians for minors, the appointment of trustees, the creation of trusts, etc.

Forms of Estate Planning Solutions

Estate planning can be done in a number of ways. There are various estate plan types, and different ones may be appropriate for you depending on the size of your estate and the types of assets you own. There are individualized plans, and there is also a generalized estate plan for people who are looking for affordable estate plans. But basically, the estate can be planned in four forms: a will, trust, deed of gift, or power of attorney.

Will

Writing and preparing a will is a prominent form of estate planning. The will is a legal document prepared by a testator (estate owner) expressing how their affairs and assets should be managed and distributed in the event of their death. Essentially, it paints a financial picture of the estate and names who gets what.

Trusts

This is one of the estate planning instruments that can help your beneficiaries avoid the stress of the probate process and the cost of estate taxes. In a trust, the owner of the property or properties (the grantor) grants another party (the trustee) the rights to hold and manage the properties on behalf of and to the benefit of the grantor’s beneficiaries. This form of goal-based planning helps those portions of the estate to circumvent the estate planning process.

Deed of Gift

A deed of gift is an arrangement that sees to the voluntary transfer of ownership of a property from one party (the donor) to another benefitting party (the donee) without the donor receiving any compensation or equal value for the gift. A deed of gift is irrevocable except when declared invalid by the court because 1) it was made under duress, 2) it was made for the purpose of tax evasion, or 3) the donor is a minor.

Power of Attorney

This is another form of estate planning that delegates the power to act and make decisions to another person. In this case, the donor appoints another individual (in many cases, an attorney or family member) to act and make decisions on the donor’s behalf in the event of the donor’s death or incapacitation. In this form of estate planning, general powers, specific powers, or both may be conferred to the donee.

Estate Planning Solutions: Important Steps to Take

Planning your estate may seem like a very hard thing to do. The thought of having to go through a lot of stress and prepare a lot of documents has discouraged many people from making estate plans. However, it is important to have estate planning goals, and it doesn’t have to be as stressful or exhausting as you think. Below, we will look at the important steps to take when creating an estate plan.

1. Evaluate Your Assets

Taking inventory of your properties is the first step to take in estate planning. Evaluating your tangible and intangible assets helps you determine the form of estate planning to be employed. It also helps you to make plans for effective distribution of such assets to loved ones.

2. Prepare a Will

Dying intestate (without a will) leaves the decision-making regarding the distribution of your assets to the state. This means that the government oversees the distribution of your wealth among survivors according to the state’s intestacy laws. This may not be how you like it, and it may not favor your loved ones. Preparing a last will and testament helps you ensure that your estate is administered in exactly the right way.

3. Make Provisions for Children and Dependents

One important step to take in estate planning is making provisions for children and dependents. Generational planning involves actions such as naming a guardian for minor children, setting up life insurance, and setting up a trust. This ensures your loved ones will be provided for should you pass away.

4. Establish Directives

It is helpful to make arrangements for what should be done in the event of incapacitation and healthcare emergencies as well as death. Setting up trusts, preparing for funeral actions and expenses, making succession plans, designating power of attorney, and establishing health and life insurance are some of the ways to achieve this.

5. Designate Beneficiaries

In estate plans, it is very important to review and stipulate the beneficiaries of every arrangement being made in clear terms. This goes a long way in reducing complexities when it is time to distribute assets. Designating beneficiaries (both primary and contingent beneficiaries) and actively reviewing them ensures that even after your demise, the right people get your properties.

6. Get Familiar with Estate Tax Laws

While planning your estate, it is very important to be conversant with the estate tax laws of your state. Considering estate tax laws in your plans helps you make conscious decisions to minimize these taxes and other costs. Ultimately, this makes it easier for your beneficiaries to get their inheritance without stress.

7. Store Documents Safely

When you have put all your estate plans in place, make sure to keep the estate planning documents in a secure place. This place should be known and accessible only to you and your executor or attorney. This ensures that you always have easy access to these planning documents so that you can make asset allocation reviews and reassessments as time goes by.

Should You Hire an Attorney for Estate Planning Solutions?

You may not want to plan your estate by yourself no matter how many articles you read. It is important to employ professional help to assist you with your estate and financial planning solutions for a thorough, stress-free experience. However, an estate planning attorney or an estate or financial planning professional may be both unnecessary and cost-prohibitive.

In addition to providing you with useful information regarding estate or financial planning solutions, probate, and law, A People’s Choice is your best bet if you need help with any estate planning and financial planning documents. We can help you fill out the correct documents completely and accurately, streamlining the process of estate planning. Reach out to us for advice and help in the compilation of any legal documents you need!