Q: What is Estate Planning?When someone passes away, his or her property must somehow pass to another person. In the United States, any competent adult has the right to choose the manner in which his or her assets are distributed after his or her passing. (The main exception to this general rule involves what is called a spousal right of election which disallows the complete disinheritance of a spouse in most states.) A proper estate plan also involves strategies to minimize potential estate taxes and settlement costs as well as to coordinate what would happen with your home, your investments, your business, your life insurance, your employee benefits (such as a 401K plan), and other property in the event of death or disability. On the personal side, a good estate plan should include directions to carry out your wishes regarding health care matters, so that if ever you are unable to give the directions yourself, someone you know and trust can do that for you.
Q: Why is it Important to Establish an Estate Plan?Sadly, many individuals don’t engage in formal estate planning because they think that they don't have “a lot of assets” or mistakenly believe that their assets will be automatically shared among their children upon passing. If you don’t make proper legal arrangements for the management of your assets and affairs after your passing, the state’s intestacy laws will take over upon your death or incapacity. This often results in the wrong people getting your assets as well as higher estate taxes.
If you pass away without establishing an estate plan, your estate will undergo probate, a public, court-supervised proceeding. Probate can be expensive and tie up the assets of the deceased for a prolonged period before beneficiaries can receive them. (This firm has been involved in several of these types of cases over the past few years.) Even worse, your failure to outline your intentions through proper estate planning can tear apart your family as each person maneuvers to be appointed with the authority to manage your affairs. Further, it is not unusual for bitter family feuds to ensue over modest sums of money or a family heirloom. As an example, this office was involved in a case between a mother and daughter over the ownership of a used kitchen table and set of chairs owned by a deceased family member.
Q: What Types of Issues Can Be Addressed by an Overall Estate Plan?It is often said that an estate plan addresses "dead people and their things." But an estate plan can and should include much more. An estate plan can address care for the decedent's living minor children, and the decedent’s living spouse. The totality of issues you may want to address in your estate planning documents should be discussed with your estate planning attorney during your initial meeting, so that all of your wishes can be known and properly addressed.
Q: What Assets Does my Estate Include?Your estate is simply everything that you own, anywhere in the world, including:
- Your home or any other real estate that you own
- Your business
- Your share of any joint accounts
- The full value of your retirement accounts
- Any life insurance policies that you own
- Any property owned by a Trust, over which you have a significant control