An uncomfortable conversation for anyone is death. No one wants to discuss losing a loved one and planning for the future.
Understanding estate laws can make the conversation and planning easier for family.
Make sure an estate is in good hands and family and friends are protected. Your passing might be tough for them, but you can ease the burden.
Do you have a will in place in the event of your death? Without a last will and testament, your family might not receive any of your valued assets.
If you have a child or children under the age of 18, they will need guardians named in your will. Think about who is responsible and experienced in raising children.
Children around the age of 12 can offer suggestions as to who makes them feel comfortable, too.
In the end, your choice of guardianship should reflect your ideals and values. Sometimes it’s good to have multiple choices.
A will decides who gets your belongings and property. A common theme is to disperse belongings equally to children.
People without kin may bequeath assets to organizations, friends, or non-profits.
Having a will protects your treasured valuables from going to the government or a former spouse.
The main thing to remember is that you get to choose who receives your assets and how much.
Revisit old beneficiary paperwork. A lot of people designate beneficiaries for insurance benefits, savings bonds, and vehicles but never update the list.
Divorce and premature deaths will require an update.
Banks and employers make it easy to change beneficiaries by giving you simple forms to fill.
While you’re updating designations and creating a will, consider converting your brokerage and bank accounts into POD (payable-on-death) accounts. This will allow your family to avoid going through the probate courts.
Living Will and Powers of Attorney
Death isn’t the only scenario that requires a solid will. There may come a time where you are completely incapacitated or without a sound mind. Do you have a plan?
Any situation where you can no longer handle daily functions or make decisions on your own may require powers of attorney and a living will.
Powers of Attorney
Without proper protection, a court can order who is responsible for your health and financial affairs. Give this task to someone who will have your best interests at heart.
Completely avoid the legal system by giving legal authority to a trusted party so they can make decisions for you. Make sure the documents explain that the powers of attorney have no effect on you unless you’re incapacitated.
Powers of attorney for financial decisions make it easy for family members to have access to money. Banks and financial institutions won’t give money to family members without the power of attorney.
If you don’t have a financial power of attorney, the court will provide a guardian and control supervision of the money.
Powers of attorney for health care will allow a trusted person to make the right decisions according to your wishes regarding life and death.
Also called an advanced medical directive, a living will gives detailed instructions for end-of-life care per your wishes.
A Do-Not-Resuscitate order directive might be the only statement in a living will. You might ask that doctors provide pain relief but nothing else.
Advanced medical conditions may have more details and instructions.
It may be best to appoint someone who is not a family member to hold these positions. Family can become jealous, bitter, or resentful. Having a third party unrelated to you keeps the decisions objective and unbiased.
You don’t want your family members going through probate court to settle and execute a will.
A living trust directly disperses money and property to the bequeathed without any oversight from a court. This transfers assets quickly.
Living trusts are very similar to a will. You name beneficiaries and can change and update the article at any time; however, trusts do not name guardianship for children.
Trusts also protect the privacy of the contents and those who inherit any assets. Living trusts are more complicated to create because they circumvent courts and can’t be challenged.
If you don’t have children under the age of 18 and your local probate court isn’t expensive or time-consuming, it might not be worth the hassle and money to have a living trust.
Estate Laws and Tax Exemptions
Look at your local and state tax laws. If your estate will foot a tax bill, it’s good to have a plan to reduce the amount.
Special trusts and gift-giving exemptions might help alleviate the size of an estate tax bill.
Federal estate tax laws allow a person to leave just over $5 million dollars without owing tax. Married couples who pass can leave twice as much. Most people will never his this threshold.
There are only six states that currently have estate taxes. Check to see if you live in a jurisdiction that has specific estate laws.
Capital gains tax law may also affect your belongings. If your home is inherited by your children, they will be taxed if they eventually sell it for a profit.
Selling your former home for a loss will result in zero taxes to them.
When dealing with complicated tax laws and exemptions, it’s always better to consult with a skilled estate attorney who can help you navigate.
It might be time to discuss failing health with your loved ones. You might just want to be prepared for unexpected events.
Knowing estate laws can help you make the right plan and comfort your family.
These can be uncomfortable conversations for you and everyone else involved, but it can save a lot of heartache and hassle after you’ve passed.
Visit our website for more information about the modern lifestyle and navigating this fabulous world.