If you have not gotten around to planning your estate, then it is high time you do. There are several reasons why you should not delay in planning how your assets should be distributed after you are no more. A comprehensive estate plan will help you decide who gets to inherit your wealth and you can proactively prevent probates and squabbles.
Estate planning is not only for the rich, it is for all of us who value what we have. A last will and testament ensure that you have a say in the welfare and wellbeing of your loved ones, even when you are no longer around.
Drawing a will alone will not suffice. There are a few legalities you need to abide by and you need to follow the right steps to ensure that your will is valid and legally binding.
Here are a few things that you need to know about creating your last will and testament.
1. It’s Always Better Late Than Never
Drawing and creating a will is not as tough as you think, neither is it as time consuming. But the only thing that can potentially complicate things is an inordinate delay in getting down to do so.
Estate tax is applicable only if your combined assets that are to be bequeathed surpasses $5,450,000 (as of 2016), which is a very high amount by all means. It is something to be worried about only if you are really well-off or downright rich.
Estate planning makes sure that there is a way to take care of your important financial decisions when you are incapacitated, enables critical healthcare decisions to be made in accordance with your interests and protects the inheritance rights of your heirs.
Delaying drawing up your last will only leave important decisions regarding your wealth and assets to the discretion of the court, if ever something were to happen to you. Your money and lifetime earnings will not go to the state in the event of you not leaving a will behind. But the laws of intestacy will dictate how your estate will be divided among your legal heirs. You can also check online how these laws will apply in your case, and most people find that they are not exactly happy with the hypothetical state-decreed arrangement.
So there is virtually no reason why you should delay in securing a better future for your heirs and valuable assets.
2. Give Guardianship Foremost Importance
This is a very important factor to consider while drafting a will. If you have minor children then it is important that you have their guardianship, and emotional and financial future secured.
The court usually decides the guardianship of minor children if their current guardian dies without leaving behind a will. The custody of children is usually granted to the spouse of the deceased, or to close relatives like parents or siblings. For many of us that may not look like the best decision for the welfare of our children. Also in some cases nominating a guardian becomes necessary when the other parent is not alive.
Ensure that you name a guardian who will take care of your minor children when you are no more. You will also have to make provisions to meet the financial needs of your children and also ideally provide a monetary compensation to the guardian (if he/she is not your spouse).
3. Assign Your Assets to Your Loved Ones
The most contested and an important aspect of last will is allocation of assets to your heirs, or beneficiaries as they are legally termed.
You can appoint an executor who will ‘hold’ your assets until all debts (if any) are settled, all properties and assets are located and identified, and everything is distributed as per your instructions.
Remember that all provisions in your will can be carried out only to the extent of what remains of your estate after clearing all debts. Assets that are held in joint possession, and those which have a nominated beneficiary like bank accounts are not subject to probates and are not controlled by last wills.
4. What Is a Living Will?
A ‘living will’ takes care of your healthcare and treatment decisions, at a stage when you are no longer capable of making those decisions.
A living will comes into effect when your health suffers and you have slipped into coma or are in a vegetative state. Living will is also known as advanced directives where you can instruct doctors as to what kind of care you would like to receive.
If you have strong opinions or beliefs, supported by religion or personal preferences, then you need to make sure that they are taken care of in the living will. Some people keep DNR or do-not-resuscitate clause which means that they would not like to be resuscitated if their heart stops or they stop breathing. DNI or do-not-incubate clauses prevent or prescribe a time period until which you would like to receive nutrients intravenously.
Living will also allows you to exercise your preferences in matters of organ and body donation.
5. Think About Forming a Trust
Forming a trust is a good option if you are very wealthy and have a lot of assets. You can bequeath your assets to the trust and the trustee/trustees takes care of the assets until children attain age of maturity or your certain conditions are met.
A trust cannot take place of last will and testament. Even if you set up a trust you should also create last will and testament that define your final wishes. A trust will not allow you to name guardians for your minor children or disabled family members, you need a will for that purpose.
Trusts allow heirs to stay out of time-consuming litigations and probates, and allow for the smooth and continued functioning of valuable assets like businesses. Experienced and trusted estate planning attorneys will be able to help you set up a trust to take care of your wealth, and interests of kids and grandkids. Trusts also make it easier to contribute to charities and philanthropic projects.
Estate planning takes time. You need to ensure that you do everything by the book and follow all laws applicable in your state. Keep in mind that even a slight lapse or oversight can result in your last will and testament standing invalidated. An experienced estate planning attorney will be able to make the process much easier and hassle-free for you, and ensure that your interests are met even when you are gone.
About The Author:
Connie Jelliffe is a lawyer at Hancock Law Firm that offers legal services like estate planning, family law, business formation, civil litigation and more. Connie has graduate degree from the University of Southern Mississippi and the Mississippi College School of Law.