A common misconception about estate planning is that it reserved only for the wealthy and senior class. The fact is, however, every adult has an estate in need of at least some minimal planning. In this article we explore the three main reasons why you need an estate plan and simple solutions you can take to sure up your estate.
1. If you have young children, you need a will. Period.
The only way to legally appoint caretakers for your children in through a Last Will and Testament. If something happens to you and your spouse and you don’t have a will in place then the state will appoint guardians on your behalf. Not only does this involve an expensive legal process, the court may decide not to appoint the persons you would have selected to care for your children. In addition to designating guardians a will allows you to specify how your assets will be distributed to your loved ones. Finally, a properly executed will also allows you to:
2. If something happens to you, who is going to take over your affairs?
Once you turn eighteen (18) the only way to designate agents to act on your behalf is by executing durable powers of attorney for your medical and financial affairs. If you are incapacitated, properly executed powers of attorney allow you to:
3. Probate and why you should avoid it.
Probate is the legal process used to validate your will, inventory your assets and settle your estate. It can be costly, lengthy and exposes details of your estate to public scrutiny. A typical probate process takes between 6 to 12 months and costs between 1% to 6% of the total value of your estate. By contrast, property transfers by other legal means, such as a living trust, can usually be accomplished in a matter of weeks. Fortunately, there are a number of alternative methods to pass assets while avoiding probate in its entirety:
The solutions discussed in this article are low cost steps you can take which produce a large benefit to you an your family. In terms of cost, we think not only of the professional fees involved but also the time, emotional stress and family harmony that can be affected by the death of a loved one.
If any of the following have happened to you, it may be time to discuss updating your plan:
John Thompson is a shareholder with Kennedy Berkley Yarnevich & Williamson, Chartered assisting entrepreneurs, families and farmers in the areas of estate and business planning.