Estate planning is something that individuals tend to think about when a senior adult becomes ill. Some people decide
to plan early before anything happens to ensure that family needs are met and assets are taken care of. Times change, however, and people do, as well. If they initiate their planning early, what applies then may not apply later on. Below are some tips on planning estates and what it entails.
What planning your estate covers
Estate planning is deciding what will happen to property and assets in the event of the owners death. They will need to decide who will be the beneficiary, or they may have more than one. If there are multiple beneficiaries, the owner needs to decide how the property and assets will be divided.
Typically, estate plans focus on a few things:
- Avoiding probate
- Reducing taxes
- Distributing property and assets
- Shield from creditors
Avoiding probate is important because this can be timely and cause much hassle and confusion. If the estate plan is laid out with certain specifications, this can be avoided. Distributing the property and assets go hand-in-hand with avoiding probate. Reducing taxes and shield from creditors will safequard family members.
Another important factor is thinking about who will care for a senior adult if they are incapacitated. There should be enough money to cover quality care and financial security for them and loved ones.
Terms and definitions
When it comes to planning an estate, there are many terms that should be understood. They can be complicated if a person doesn’t know what they are and mean. Here is a list of some. A good attorney can help understand terms better and decide which route is best.
Dying intestate means an individual dies without having a will or trust in place. This can lead to many problems for family members and heirs.
If someone dies with property in their name, there must be a probate. Probate is the state’s legal procedure for handling an estate. They will determine the final identification of who owns the estate and if there are any creditors owed. They will decide who the rightful heirs of the estate are and what share each will receive. Finally, they will take the legal title out of the owner’s name and into the name of the rightful heirs. This can be lengthy but can be avoided with estate planning.
Most couples and some parents and children have joint tenancy ownership. This means the estate is in both parties names. If there is no other method in place, the surviving partner automatically receives the decedents part of the estate.
Beneficiary arrangements can be specified on certain types of items like pension plans, annuities, bank accounts and insurance policies. When an individual dies, the remaining amount will automatically be paid to the person or persons listed as beneficiary.
If an individual has sole or joint ownership and becomes mentally incapacitated, the estate is on hold because that person cannot say or sign what to do with it. An estate plan will remedy this from happening. A durable power of attorney can also be assigned to take over before this happens.
It is important to plan an estate as early as possible and re-check it at least every 3 to 5 years to ensure there should be no changes. Families have enough to deal with and shouldn’t have added problems, too. A good attorney can help set up a plan and decide what is best for everyone involved.