More than 55% of surveyed Americans reported they don’t have a will. The process of estate planning is emotionally and physically draining, which is discouraging. Yet, you need to have a plan on how you want your loved ones to handle your estate upon your demise.
Contrary to what many people perceive, your estate goes beyond your real estate assets. It involves all personal property, bank accounts, life covers, and stocks. Failure to have an estate plan can lead to chaos.
Are you wondering what is an estate plan? If so, then read on to learn everything you need to know.
What is an Estate Plan?
Estate planning encompasses plans for estate transfer after death. Estate planning isn’t only for the affluent. If you want to provide for your loved ones adequately, you need to plan how your beneficiaries will handle your property.
Your estate is all you own from your home to other possessions, such as jewelry. With an estate plan, your lawyer will ensure that your heirs follow your instructions to the letter.
An estate plan has several facets that apply before and after you die. Some of the instructions include the care you’d want to receive when you age and can’t perform optimally. Besides, you can incorporate some of your values in the plan, such as hard work and education to guide your heirs.
A good estate planning ensures that you provide sufficiently for your loved ones with special needs and minors. It further incorporates guardians, who are responsible for minors’ inheritance. You need to keep updating your estate plan to include the changing financial situations and family structure.
One of the terms that you might come across in estate planning is power of attorney. It refers to an organization or a person that handles your affair when you’re incapacitated. Your appointed representative is an agent or an attorney-in-fact.
You might also come across the term trust. It is an arrangement that involves entrusting a property to an organization or an individual on behalf of your beneficiaries. Understanding the terms is crucial in estate planning.
Why do I need an Estate Plan?
You don’t have to wait until you are in your old age to plan for your estate. In fact, estate planning should start as soon as you hit 18 years. You can keep updating your plan as you accumulate more wealth.
Get a qualified team of lawyers in estate planning. The benefits of planning your estate legally are worth pursuing.
1. Reduction of Estate Tax
When you have an estate plan, you won’t be subject to heavy state inheritance taxes or federal estate taxes. What’s more, a couple can eliminate these taxes by establishing ABC Trusts to be part of their revocable living trusts or their wills. People have been embracing several techniques for advanced estate planning to reduce the taxation burden.
2. Avoid Probate
Probate is an expensive and long nightmare you would want to avoid at all costs. When your estate is subject to probate, your family can’t access cash immediately. It can be draining to have to scramble to pay for bills when your estate is worth millions.
Besides, probate exposes information about your beneficiaries, assets, personal representatives, and liabilities. Anyone can access your information easily. If you’ve been keeping your financial details private, probate will undo the effort.
An estate plan will save your loved ones the headache of probate. Ensure that you work with a recognized attorney. You don’t want to leave your family conflicting with the law.
3. Protect Beneficiaries
In the US, Massachusetts has the highest number of homeless families with children, which is about 1,959. Your loved ones can be victims of homelessness if you don’t have an estate plan. Malicious people can evict minors upon the demise of an adult.
Estate planning protects minor beneficiaries and adults who might be prone to uninformed decision making. A guardian can act on behalf of a minor. By the age of 18, a minor has the legal age to take over an estate.
If you understand what is an estate plan, you’ll make it a priority because it will address many family discords. With the inherent selfishness notable in humans, an estate plan ensures that every person gets the inheritance that a deceased person deemed appropriate.
4. Asset Protection
You need to protect your assets from lawsuits and other creditors. An estate plan is one of the strategies that will make your property inaccessible to creditors. Transfer your assets to your beneficiaries even when you don’t have a pending case.
Trying to have a plan in place when creditors are on your neck is too late. ABC Trusts can be ideal for spouses. You can also consider lifetime trusts for other beneficiaries.
Steps to Take in Estate Planning
When you’ve identified an accredited estate planning attorney, you can start the process of estate planning immediately. Writing a will and estate planning are inseparable. The first step involves making a will, where you specify your heirs and guardians for minors.
You can also consider a trust to avoid probate. You need a power of attorney for your finances. The trusted person can handle your affairs and finances if you lack the capacity.
Estate planning will also involve making healthcare directives. When you’ve advanced in age, you might need assistance in making healthcare decisions. This information should be on the plan.
Your end-of-life wishes should also involve funeral arrangements and expenses. Having life insurance is a decision you would want to consider.
Store your documents securely. Your agent will need access to documents such as trusts, wills, deeds, insurance policies, and any finance-related documents that can help in estate management.
Take the Necessary Steps to Get an Estate Plan
An estate plan is one of the crucial resources that your loved ones will appreciate in your absence.
You ought to have the right information before contracting a lawyer. Get a qualified estate planning attorney to guide you on the viable options.
Don’t wait until you are too old to have an estate plan. Your attorney will guide you through even as you create or update your plan.
Have you understood what is an estate plan? Do you need an estate planning attorney? Our online directory will assist you in finding the right attorney.
Life in the 21st century has many ups and downs and sometimes it throws you a curve, knocking you off balance. It is why estate planning is so important – getting your possessions under control. The sooner you start planning the better, because nobody knows what the next hour will bring, let alone tomorrow.
If you were to die today, how are your assets going to be distributed, and to who? How are your assets currently being managed?
Your assets are all the things you own – your cars, your home, your insurances and your jewelry. The most basic aspect of estate planning is having a will. The will stipulates who gets what. The law office of Stanton D. Goldberg knows that estate planning provides peace of mind because you’re providing for your family after you’ve passed on.
Always look for reputable lawyers. With Stanton D. Goldberg estate, planning is far more than drawing up a will, and they provide their very able help with all kinds of estate planning so that the future remains bright for your family.
If you die without a will, you’ve died intestate. It means that the intestacy laws of the state will decide how your property is distributed after your death according to whether you were married, single, had kids or not. Most times your property is split among your so-called heirs – uncles, aunts, etc. Without a will, some of your possessions might land up in the hands of some distant family members you couldn’t stand.
There are a few reasons why estate planning is so crucial-
1. Good Education for your Children
Imagine your young, intelligent children not being able to study and to reach their dreams? Estate planning can see that your children have a good education when you’ve passed away. If you don’t make provisions for your children’s future, they could end up as adults without a job and without a goal. If you don’t have sufficient assets to secure your children’s financial future, you could buy a term life insurance policy – an excellent choice for protecting your children’s future.
2. Family to get Assets
After you’ve died, would you like to think that all you’ve worked for is going to land in the hands of your spouse’s new partner? Estate planning will ensure that your assets go to your children rather than to your spouse’s new husband or wife.
3. Offshore Assets
If you’ve got offshore assets, it means your foreign estate will need to be administered. Your will might not meet with the legal requirements of the country where your assets are situated and you may need to execute a separate Will dealing with those assets.
4. Living Will
If you have no intention of being kept alive on life support while being brain dead, a living will stipulates what your wishes are regarding the medical care you receive or prefer not to receive.
Without estate planning in place, your family could crumble financially. Good estate planning will make sure that your family is provided for so that they can continue to live the life they’ve been used to, and not left to face financial ruin once you’re gone.
People must do estate planning to ensure that their assets fall in the right hands after their death. Estate planning helps to express your wishes about the distribution of your assets when you are no more by specifying who gets what and in which manner. When you do estate planning, it becomes a legal record of your wishes that start functioning after you pass away and gives you the satisfaction of allocating your assets in the way you want. Some people might look upon estate planning as an exercise for the rich, but the truth is that everyone must do estate planning regardless of their net worth.
Not having a plan about the manner of distribution and utilization of your assets after your death can have far-reaching and costly implications on your loved ones even if you do not have too many valuables, a pricey home, and valuable art and large IRA to pass on. To create an estate plan, you must seek the guidance of a lawyer like the Investment Lawyers & Attorneys – Costello Law Group to ascertain your desires and goals and then put it together in the form of an estate plan. The plan should help to realize your goals and objectives.
How an investment lawyer helps in estate planning
Besides protecting your assets after your death, estate planning also helps to protect your independence during your lifetime that the estate planning lawyer who is also an investment lawyer can guide you. The role of the lawyer is very important to ensure that your plan has legal validity and recognized under the current laws of the state. The plan will ensure that your estate is in order after you pass away so that it can provide your family and the loved ones when you are there no more. The lawyer can help in estate planning that covers the aspects of wills, the formation of trusts, tax planning, estate and probe administration and guardianship as well as estate litigation. The most basic form of estate planning constitutes of wills, power of attorney, advance directives, health care proxy, and a living will.
To have more clarity about the role of investment lawyers in estate planning, you must get familiar with the various aspects of estate planning.
Power of Attorney
When you want some other person to manage your financial affairs, you must issue a legal document to empower that person in handling your finances, and this document is the Power of Attorney. Power of attorney is of two types – general durable power of attorney empowers the person with immediate effect without any condition attached, and the other is the springing type of power of attorney that passes on the power to that person only when you are incapacitated physically or mentally. In the absence of power of attorney, it can be very costly later to initiate the conservatorship process that would also take a long time and prove frustrating in case you become incapacitated any time. Staying prepared with a power of attorney is always a smart move to take care of any eventualities.
If you have heard about the term advance directive, then you should know that it has another name for a living will. The will helps to express the desire of the person executing the document about the use of extraordinary measures in case the person reaches an end-stage of life due to certain medical conditions. The document specifies whether the person intends to avail any medical care or does not want it in a situation when the person is unable to communicate his or her wishes. If the person remains unconscious due to some medical condition doctors and healthcare providers would refer to the living will for determining the permissible actions that they should or should not take for life-sustaining treatment. In the absence of a living will it becomes the responsibility of the spouse, family members, and any other third party to make decisions about the future medical assistance of that person.
Last will and testament
A last will and testament is a legal document by means of which a person can identify the person/s or charities that are to receive his/her property and assets after his or her death. The will helps to prevent the distribution of your property and children under the statues of intestacy of the state. The individuals and charities mentioned in the will are the beneficiaries in the eyes of the law. It is not enough to create a will, but you must also nominate an executor who will ensure proper administration of your estate and the distribution of your property among the beneficiaries as stated in the will.
On the death of the person who creates the will the executor whether an individual or an institution will petition the court for formal appointment as an executor of your estate. After appointment by the court, the executor starts managing the financial affairs of the deceased and ensures proper distribution of property and other assets as stipulated in the will. It is also possible to nominate a guardian for adolescent children within the provisions of the will in case there are any children less than 18 years at the time of the person’s death who would require some guardian to take care of them.
Health care proxy
The health care proxy is a legal document that allows a person to appoint another person to make medical decisions in case they are unable to in the future. The person entrusted with the health care proxy can make decisions regarding the use or non-use of life-sustaining medical measures for medical support that the affected person receives. In case you become incapacitated and need someone else to decide about your health care needs then the health care proxy is the only document that records the wish you had consciously expressed when you were fit enough to do so.
Estate planning helps people to take advance decisions to fulfill their wishes about property, assets, finance, and healthcare when they become incapacitated or pass away.
There are many reasons why we avoid getting a will done. We are all busy balancing the bills, work and the kids, it is easy to bypass preparing a will, notably because it can cost hundreds of dollars. The subject of dying is also not something that many of us like to think about. These are just some of the reasons why some opt to use a will kit.
It is widely known however that lawyers love will kits. Will kits can only cater for a limited number of scenarios, and because of this, they may not be suitable for everyone. There have been unfortunate cases where users have tweaked the printed text of a will kit only to leave their estate at risk of legal challenges.
And this is why lawyers love will kits.
The world has gone digital, and humanity is rapidly moving online. In some cases, the concept of ownership has changed. Our music collections are online, our bookcases are online, and we even have more friends online than we do in real life.
So what happens to all of that when we die?
Social media companies like Google and Facebook are adding functionality that caters to the dearly departed, but the legal industry has also been pretty slow to adapt. Lawyers generally avoid new technologies, and they do not offer succession planning for digital assets like social media profiles and digital currencies.
What About Online Wills
Technology has improved pretty much everything it has touched. LegalTech has already offered solutions for improved billing, document storage and even case management. Soon the use of emerging technologies like Artificial Intelligence (AI) will enhance the industry and make justice more accessible.
So what about moving wills online?
Not being restricted like a printed will kit, online wills can cater for more scenarios. The Uber or Airbnb gig model suggests that lawyers will also be more efficiently available and at arm’s length.
OneWill, for example, offers social media and digital asset estate planning as well as the ability to capture audio and video messages which will allow users to communicate their wishes more clearly reducing the risk of confusions.
It is important to remember that online wills are not for everyone. There are scenarios where you shouldn’t choose an online estate planning solution.
An online will is not necessarily the best option if you are a high net-worth individual, if you have a blended family or if you own a company or a trust.
One thing is for sure, and that is that as the LegalTech industry grows is certainly is not a good idea for lawyers to assume that technology can never do what they do.
Every senior should have five documents in his or her estate plan. For financial concerns, A Will (Trust) and a Durable Power of Attorney (DPOA) are a must. For health concerns, a Health Care Proxy, Living Will and HIPPA agreement are necessary.
A Will is a document that directs how any assets in your name alone, whether real estate, personal property or money (in all its myriad forms, such as stocks, bank accounts, CD’s, etc.) is distributed upon your death. By making a will (or a Living Trust) you can determine who gets what (or doesn’t get what), according to your wishes. If you die without a Will, the State will make these determinations for you. A Will ensures the choice will be yours.
The second financially based document your estate plan should contain is a Durable Power of Attorney (DPOA). If through mental and/or physical infirmity, you become what is considered “legally incapable” of handling your own affairs, the DPOA pre-appoints somebody of your choice to make decisions for you in your interest on your behalf. If no DPOA is in place and you become legally incapacitated, your family, friends, or whoever is close to you, must go to probate court and petition the court to become your conservator, a time consuming, expensive, and nerve-racking experience. By having a simple DPOA in place, this potential crisis may be completely avoided.
A Health Care Proxy is a document that appoints an agent to act on your behalf should you be physically and/or mentally incapable of doing so. Without such a document appointing an agent (and usually an alternate), your friends and/or family would be forced to go to Probate Court to get a Guardianship for you, a time consuming, expensive and nerve-racking experience. With a valid Health Care Proxy, the agent should be able to act on your behalf without having to pursue a Guardianship.
A Living Will, a companion document to a Health Care Proxy, is a direct statement from you yourself, stating if you should be on life sustaining equipment, in a vegetative, comatose state, with no chance of recovery, that you would not want to be kept alive by mechanical means in those circumstances. Although a Health Care Proxy appoints an agent to make this decision, the agent (or the medical institution) is under no legal obligation to make the decision you want. A Living Will helps insure that your agent (and the medical institution) will follow your wishes.
A HIPPA release agreement is a relatively new document (2003) which evolved in response to privacy of health records legislation. Such agreement insures that your health care agent has access to your medical records if needed. Without such a document, a medical institution will often not give your agent your records for fear of violating privacy laws.
Trusts can be valuable tools for estate planning purposes but are often misunderstood. Much confusion exists as to what kind of Trust does what. So, here is a brief overview.
A Revocable Living Trust can be useful for maximizing the amount of money a husband and wife can leave estate tax free. It can also be useful for avoiding probate if properly administered. Contrary to popular opinion, however, it does not protect assets against potential nursing home costs. An Irrevocable Trust may protect assets against nursing home costs (depending on the amount of time that has passed since establishing the Trust). However, since only the income (and not the principle) is available to the Trust maker, you must be able to live on the income generated. A Testamentary Trust is a Trust established in a Will that can be useful for certain nursing home situations and also for Will bequests you might want distributed over time (instead of all at once).
Trusts can be useful for specific purposes you might have but tend to be more complicated than basic estate planning documents (Wills, Durable Power of Attorney, Health Care Proxy, Living Wills and HIPPA release) If you think a Trust might be relevant for your situation, it might be useful to talk with an estate planning attorney.
Different life stages call for different insurance coverage especially when you own a home. A young single individual or empty nester does not need as much insurance coverage as a parent with young children. Learning the ins and outs of the basic insurance needs you may have is a good first step towards a solid financial education.
Life Stage Young Adult
As a young adult your financial responsibilities are usually few. If you happen to own a home, your insurance needs will be higher than if you are renting or living with your parents. If you have financial responsibilities like rent or a mortgage, you should have short term and long-term disability. This insurance will help ensure that you have a roof over your head should you get insured or sick and are unable to work.
Life insurance would be minimum since you are not supporting anyone at this point in your life. You should opt to have a minimum term policy of $10,000 this would cover any funeral costs if the unfortunate happened. This insurance would keep your parents or other family members from going into debt to handle your final arrangements. If you own a home at this point it is unlikely there is much or any equity, but the sale of the home should take care of any open financial ties if you pass.
Life Stage Young Married/Partnered Adult
As a young couple you have financial responsibilities to each other to ensure that you are taken care of incase one of you can no longer work or you pass. You are either renting or living in your first home. You and your significant other depend on one another to cover monthly expenses.
You want to ensure that your partner is taken care of if something happens to you and you also want to make sure if you or your partner is unable to work that your financial responsibilities are still taken care of. You should have a life insurance policy to cover all financial burdens that you and your significant other share, rent, mortgage, car loans, credit card or other debt. Short term and long term disability are key to making sure you do not lose income if you are unable to work for a short period of time or if you become disabled and need long term disability.
Consider adding a home warranty insurance plan to your monthly expenses. As most young couples do not have much in expendable income, this low monthly policy can help if any untimely expenses arise for the appliances or home systems in your first home.
Life Stage Young Couple with Children
Young couples with children have the highest need for insurance. They are now the providers of not just themselves, but they now have dependents. If the couple is still renting, they do not need to have a life insurance policy large enough to pay off a mortgage, but they would want a policy large enough to help cover all monthly expenses if one parent passes. The transition from being a two-parent household down to one would take a great deal of time and stress.
Removing the financial burden from your significant other is the best thing you can do for them if you pass. You will need short term and longer-term disability to help ensure your monthly expenses are covered if you or your partner is unable to work due to an injury. Consider adding a home warranty to your monthly expenses as this small monthly charge can help cover any repairs that come up in your home with your appliances or home systems. If you own a home you will need a life insurance policy that will pay off the mortgage, and all other debts and allow your partner time and resources to make life adjustments. For each child you should have a life insurance policy for a minimum of $5-$10k.
Consider adding a cancer policy to help cover expenses that could come with missing work and caring for a member of your family while dealing with the illness. Have a life insurance policy and plan in place incase both parents pass and family would care for the children. The cost of raising a child and any life adjustments should be considered when deciding on how much insurance is needed.
Life Stage Mature Couple with Older Children
Couples with older children may not need as much life insurance as the amount needed to care for and raise the children has decreased. The above policies are still suggested.
Life Stage Empty Nester
Once children are out of the home and are no longer being cared for by the parents, the life insurance policy needed to help raise the children is no longer needed. At this point whether or not you need a large life insurance policy may depend on your financial situation. If you are still living paycheck to paycheck, having a life insurance policy would be ideal to ensure that if something happens to you or your spouse neither of you are left saddled with debt.
The need for additional insurance policies may not be as immediate as most people are planning toward retirement, extra funds should be going into investments to grow a retirement savings. Since most of any expendable income should be being invested consider keeping the home warranty on the home to keep you from having to worry about unexpected repairs with your home’s appliances and home systems. If you haven’t already sold your home and moved into a smaller home, consider adding the home warranty with the sale of the home. This makes the new buyers feel more confident in the purchase that the home they are buying has been well taken care of.
Life Stage Retirement
After you have moved out of your home and downsized, you can consider downsizing on your insurance needs. Your children are grown and have their own life insurance policies; you do not need to have policies on them at this point. You may already own your home or have moved back into renting, so having a life insurance policy to pay off a mortgage is also no longer needed. You are living off of your retirement, so eliminating unnecessary expenses is key. Many adults in their golden years have already prepaid for their funeral expenses, so having a policy in place to cover that expense is no longer needed.
You are living on a budget, so be sure to avoid any unexpected expenses at this point. You can keep the home warranty on your home and this will help keep your budget in line and you do not have to worry about the fridge going out or furnace. Focus on the beauty of retirement and relax knowing you are covered.
No one wants to think about a time when they won’t be there for their family. Yet the fact is, no one’s time on this earth is indefinite. In addition to the natural progression of age, there are any number of accidents that could happen without warning. It is important to protect your children and family members from undue strife in the event you are no longer here. Estate planning allows you to plan for the future to care for your children, spouse, and family when the time comes.
When You Should Do Estate Planning
Estate planning is something that should be done by all new parents. It should also be updated periodically as your assets change. If you have never done estate planning and you have assets, children, or possessions that you want to be sure of where they go, you will need to make sure that you engage in estate planning as quickly as possible. If you are retired, recently purchased your home, came into some money such as an inheritance, or discover severe health issues, these are also common reasons to begin estate planning in earnest.
What is Estate Planning
Estate planning is about more than just drafting a will. The last will and testament is of course important, especially if you have children. This document will dictate how your assets are divided, who is to take custody of your children if they are minors when you pass, and your final wishes. However, there is more to estate planning than this document.
Estate planning also involves additional measures such as trusts and other instruments that can help keep your estate out of probate. It is much easier for your surviving family members to take possession of your property and assets if you plan accordingly in advance. If estate planning is not done properly, even with a will your estate could be in probate for months before your family sees a dime.
Estate planning can also include planning for final expenses, such as getting life insurance and setting up beneficiaries, buying burial plans, or buying burial lots. In short, estate planning encompasses everything that needs to be addressed when you are no longer here to take care of your family.
Hiring an Attorney
There are a lot of kits available online to draft your own will, but this is generally not recommended. To be truly effective, estate planning needs to be done with the aid of a well versed estate and probate lawyer. This will ensure that your estate is handled effectively when you are no longer here to direct it. A good attorney will also be a wise choice for executor of your estate to make sure that all is as it should be. If you need to start thinking about estate planning, contact an attorney today to get started.
Many spouses take out life insurance plans and list themselves as beneficiaries to pensions, 401k plans, and other retirement benefits. The idea is to provide protection to the spouse and family in the event of a death. A divorce, especially if one of the spouses remarries, dramatically changes the couple’s original estate plan. While the divorce is underway, each spouse has certain rights to retirement accounts and each must meet his or her legal obligations until a divorce settlement is reached.
A time will come when assets get divided. Soon thereafter, the estate plan needs to be revised. Below is a list of four things a divorced spouse should do to get his or her estate plan updated to reflect the end of the marriage. Check back next week for four additional strategies for estate planning during a divorce.
- Update health care proxy: If you listed your former spouse as the person you authorize to make health care decisions for you, you will need to choose a new decision maker.
- Revoke power of attorneys: If you and your spouse have executed powers of attorney, you will need to make changes. You can revoke the power of attorney, execute a new one, and be required to notify your ex-spouse of the revocation.
- Automatic restraining orders: When you file for divorce, an automatic restraining order is placed on your assets. Neither spouse can change beneficiary designations while the divorce is pending absent written agreement.
- Update your will: Remove your current spouse from your will and appoint a new executor or person responsible for distributing your gifts following your death. If you have young children, think about guardianship options and naming an alternate guardian, in the event your former spouse dies or loses custody of the children at a future date.
Contact an Estate Planning Attorney in New Jersey
One of the last things people think about when they are getting a divorce is updating or creating an estate plan. Estate planning is not something you undertake for yourself alone. You do it for your loved ones to help your family after you pass away. Your ex-spouse may no longer be in the picture, so thinking about and updating your estate plan should be an immediate step following your divorce. The Giro Law Firm serves the Bergen County, New Jersey community and surrounding areas. We help individuals with all of their estate planning needs, including the drafting of wills. Make sure that your belongings are left to the people or organizations that you choose with limited headaches and fees for them to receive your gift. A will is not the only thing an estate planning attorney can help with. Talk to an Estate Planning Attorney in New Jersey today about powers of attorney, health care proxies, and Medicaid planning for long term medical care.
The Giro Law Firm is a New Jersey and New York law firm located in Newark, NJ that handles a wide range of legal matters that affect the elderly and disabled populations, including retirement, guardianship, health care, long term care planning, Social Security, Medicare/Medicaid, among other legal services. To request a consultation with an Estate Planning and Divorce Attorney New Jersey, click here or call (201) 690-1642.