Most individuals start amassing personal wealth early in their lives and continue to do so as they grow older and accumulate income. This money allows them to establish an estate, provide for their family, and save up money for retirement.
While climbing the ladder of success, you shouldn’t be fooled by all the time that is still ahead of you. Many people put off estate planning, believing they can arrange for the transfer of generational wealth sometime in the future. But there is no time like the present to secure the futures of those you wish to pass assets to. Here are some answers to the most common questions surrounding estate planning.
Do I Have To Be Rich To Have an ‘Estate’?
No, an estate consists of anything from family heirlooms passed down to you, money in your checking and savings accounts, real estate, corporate stock, or a membership interest in a limited liability company to even your retirement plan, IRA, and life insurance benefits. Your clothing, books, furniture, and coin collection are also part of your estate. Not all your estate passes through probate, but a lawyer could help you settle the disposition of your assets according to your wishes and the appropriate laws.
At What Point Do I Really Need to Start Estate Planning?
Anyone with assets is able to estate plan. If you fail to plan for the distribution of your assets, the government will do it for you, even to the point of keeping your assets if you have no heirs. This doesn’t have to be the case as you can leave assets to beloved friends or charities, and you can even set up a pet trust to care for your pets. If you are going to leave a considerable estate, planning for distributions to descendants can lessen their tax burden and ensure your heirs receive their share accordingly. In addition, everyone, young or senior, regardless of asset level may benefit from planning for incapacity.
What is Probate?
Probate validates your will, settles your debts with creditors, and distributes your assets according to your final wishes memorialized in your will. Probate is applicable when a will is executed.
What Are Trusts?
Trusts can be both revocable and irrevocable. Revocable trusts, called living trusts, are trusts that you can manage during your lifetime. They allow you to add or remove beneficiaries and assets as you please. Living trusts circumvent probate, so assets are administered quickly after your passing, with less expense than probate. Revocable trusts become irrevocable after your death. Irrevocable trusts own the assets you deposit into them, and a trustee other than you controls assets after you deposit them.
I Have a Living Trust, Do I Need a Will, Too?
Yes, a will addresses assets you did not transfer to the living trust during your lifetime. Assets excluded from your living trust should have beneficiary designations, such as your life insurance policies or IRAs and any retirement accounts. Real estate not jointly titled can also be subject to probate if it is not part of your living trust.
What Are Other Estate Planning Measures?
Some steps you can take are designating agents to step into your shoes should you become physically incapacitated, setting up power of attorney that will allow people to pay your bills, arrange housing, sell real estate, conduct banking, and make healthcare decisions for you. You can also execute a living will that is a directive to your healthcare team if you feel that you are in the end stages of your life.
Discuss Estate Planning With Our Dedicated Team
Estate planning is a lifetime roadmap that allows you to both control the assets you amass and control what happens to you when you become incapacitated. No matter where you are in life or how much wealth you have, you should consult an estate planning lawyer to discuss your future. Call our Price Benowitz today to get started.