Estate planning usually refers to the process of creating a plan
To manage the distribution and movement of a person’s possessions and assets after their passing or after they are incapacitated. These possessions and assets are collectively referred to as their “estate” and include everything from real estate, insurance policies, personal property, financial assets, investments, and bank accounts. In addition to inheritances, estate planning may include funeral planning and debt settlements. Estate planning is vital because in the absence of legal documentation to carry out the wishes of deceased individuals, that individual’s estate may have to go through a court process called probate.
Probate is a lengthy, expensive, and time-intensive process
Where the individual’s estate is divided among the survivors by the court. Probates are carried out by the state, so if the deceased had assets across many different states, each of these assets must go through those states’ probate process. This process can last between 9 months to two years or more. Probate is a generally stressful procedure for survivors already undergoing the grieving process, with decisions often made against the intentions and wishes of the deceased. If the deceased was married and had children, the spouse and children each receive a share, although the court controls the inheritance if the children are minors. If surviving minors are left without both parents, the court will appoint a guardian. However, joint-owned assets or assets with named beneficiaries will be able to bypass probate.
Although an estate plan is recommended for everyone
Estate planning is especially needed for business owners, individuals with minor dependents, and dependents with special needs. When an estate plan is created, loved ones of the individual are identified in fine print to facilitate the movement of assets with as few legal complications as possible. Estate planning also helps to avoid any fees or taxes that may be incurred in the transference of property, and aids survivors in avoiding probate.
In the case of a disabled individual who is still alive
Estate plans also provide a framework for establishing guardianships and making important decisions when the individual cannot. In the event of debilitating illness, an estate plan can provide instructions for healthcare and management of financial assets once the planner can no longer communicate. Estate plans for those with disabilities come in two parts: one for personal decisions and one for financial decisions. Advanced Medical Directives hand over care and medical decisions to an individual of the disabled’s choice, while the Financial Power of Attorney delegates a person to make financial decisions.
In the event of disability
The family of business owners and investors will not be able to sign for the individual on important assets with the individual named as the owner. The signer is a court-appointed guardian, and they control how the individual’s assets are used. The process is complicated, expensive, and open to the public with potential inheritors encouraged to claim their share, so it is to be avoided if possible.
Estate plans mainly consist of a will or a living trust
Although wills can provide direction, assets under the deceased’s name or in their will still go through court’s probate process. While living trusts are more expensive, they are the preferred legal documents since they can help avoid probate, clump all assets together, ensure privacy, and prevent the court from controlling the deceased’s or disabled’s assets. With a trust, assets can still be managed by a trustee and distributed to the beneficiaries at an appointed age.
At WellPath Partners, we are skilled at advising seniors on their estate planning options and can help you find the option that is right for you. Contact us today for a no-obligation consultation.