A trust is a legal way to set aside your hard earned assets for a specific and desired purpose. A living trust is a type of trust that can be initiated while you are still alive, offering flexibility and control over your estates in the event of incapacitation or death.
How a living trust is different from a will.
You might be asking yourself, “is there really a difference between a living trust and a will?”
Living trusts are set up before you pass on and can be used in case you are incapacitated. A will only goes into effect upon death. Utilizing a living trust can help you avoid probate court and your assets will be granted to your beneficiary immediately.
One reason for consulting with an attorney regarding a living trust is to remove the unnecessary and painful legal proceedings following a loved one’s death. With a will, you can’t avoid probate court and the assets become public record. With a living trust, you exclude probate court and all your assets remain private to your beneficiary.
What exactly is a living trust?
A living trust is a legal estate planning tool that breaks down how your assets are to be used or distributed in any event of incapacitation or death. A living trust specifies legal relationship between three basic groups.
- The grantor, who funds the trust
- The trustee, who manages the trust
- The beneficiary, who receives the proceeds & assets
Living trusts are powerful legal documents regarding your estate and how you would like it dispersed among your beneficiaries upon death or incapacitation. Living trusts protect assets such as real estate investments, bank accounts, investments and property.
Upon your passing, your wishes will be carried out and passed to the beneficiaries all while avoiding the negative aspects of probate court.
Living trusts are important, and below are important reasons to have a living trust.
- Avoid Probate
- Privacy Protection
- Save Money & Protect Property
- Greater Control of Assets
A living trust gives you control of your hard earned assets while you’re still alive, but you pass on the control to a trustee to pay the beneficiary under specified conditions. These conditions allow for greater control over your assets even when you’re gone.
So, why is it a good idea to arrange how your assets will be handled upon death? It helps take away decisions for your beneficiary or spouse during a tough and emotional time. With a living trust, you can place many different assets into a bank account, allowing loved ones to be cared for immediately.
Probate is the court-led process that usually handles an estate after death. In general, the probate process involves a court examining the provisions of a will and the assets included (or excluded) within.
There is usually a waiting period from one to three months in which the beneficiaries could have limited or no access to any of the funds in the estate while in probate. A living trust is an effective method of avoiding probate court. One of the main reasons it is best to avoid probate is because of the fees and other costs which can be calculated as a percentage of the total estate. Avoiding probate means that money won’t be deducted from your estate, and your beneficiaries will receive everything you intended for them to inherit.
A will and all assets not covered by a will are subject to probate and thus become open record. The probate process is public record, which means anyone can look up what assets were in the estate and what beneficiaries received what assets. Setting up a living trust is a method of avoiding probate and can also be used to protect the privacy of your estate and thus your beneficiaries.
Another key benefit of living trusts is that they can be enacted when the grantor is incapacitated. The trustee will take control of your assets during this unfortunate situation and then manage your estate according to your predefined stipulations, including ensuring the trust is run for your benefit as the trustor. This is different from a power of attorney or health care power of attorney in that it details how your assets are to be managed while you are incapacitated, as well as what to do in the case of your death. Living trusts can also be set up for married couples that will set aside funds or assets to provide for the surviving spouse.
Trusts offer greater flexibility in determining how assets are to be distributed in various situations. A living trust can also detail how assets are to be managed in case you are incapacitated. There are a variety of trusts, such as living trusts, which can be revocable or irrevocable. A revocable living trust can be changed while an irrevocable one may not. It may be a good idea to consult an estate-planning attorney for complex situations to ensure your assets are managed in the best possible way. Living trusts will provide greater flexibility to manage your assets in the way you want, including how they are passed on to heirs.
Save Money & Protect Property
Estate taxes and protecting assets from lawsuits or creditors is a concern when estate planning.
Certain trusts may even be arranged to be managed overseas to avoid jurisdiction of some courts. Also, trusts can provide benefits in cases of joint tenancy. Since a trust allows for the assets to be split up as desired, it can be parceled out in amounts or in ways that limit the impact of costs while maximizing associated tax benefits. It is important to consult a legal professional before funding any trust to ensure your assets are managed legally.
Greater Control of Assets
A living trust allows you to decide how your estate will be managed in various situations. This can give much greater control over how real estate and other property will reach beneficiaries compared to a will or other legal documents. A trust can be arranged to payout assets immediately, over time, or when the beneficiaries reach certain conditions. This is especially useful when setting up a trust for children who are not old enough to manage their money.
A living trust can also be used to set aside money for a person who might not be mature enough to handle a large sum at that time, such as grown-up children with mental issues or drug problems. Trusts can also be set up to manage assets for situations where relationships may be complex. Finally, some living trusts can set aside assets in a way that is not counted for end-of-life care and Medicare proceedings.
At Rhodes Law Firm, we’re focused on providing our clients the best possible service regarding personal estate planning, as well as business planning and asset protection. One of our clients, Jeff Annis of Advanced Services Pest Control, talks about the important of having business plans in place and his experience with our firm. If you are looking for help with your business plan or estate plan, contact us today.
Selling a small business isn’t like selling lemonade, or even selling a car. It’s a major undertaking with several moving parts, requiring experienced negotiators, capable lawyers, and a successful strategy from day one.
Which means that if you want a sale to succeed, you need to go in with a plan.
If you plan on selling your business, here are seven steps you should take to make the whole process easier.
1. Get Your House in Order
Before you do anything else, you should start by getting your affairs in order.
You might not think that you need to. After all, the business is profitable, and while there are areas where functions could be clearer, everything more or less goes without a hitch.
Keep in mind, though, that you’ve been with your business since the start. Things that make sense to you could easily spook a potential buyer.
When you first consider selling your company, make sure to get these things in order:
- Financial records
- Financial reports
- Employment contracts
- The legal structure of your business
- Any family ownership arrangements
- Intellectual property arrangements
If you’re unclear on any part of the puzzle, your attorney can help you figure out where you should focus and how to protect your assets in preparation for a sale.
2. Prepare the Right Documents
The next thing you can do to smooth out a deal (and help your lawyer’s peace of mind) is making sure that you have the right legal documents prepared.
This includes things like:
- Financial statements (profit and loss, cash flow projections, etc.)
- A complete list of stockholders and shareholders
- A breakdown of the percentage of shares owned and stock issued
- A list of names and titles of everyone authorized to sign papers for your business
- Copies of all employment contracts
- Copies of all your business’s insurance policies
- Copies of your incorporation papers or equivalent paperwork
- Copies of your federal and state tax returns going back three years
- Copies of any pending lawsuits
- A schedule of company assets
- A complete list of your company’s creditors
Keep in mind that this list is by no means exhaustive. If you’re not sure what documents you need, ask your attorney.
3. Separate Lines of Business
Multiple lines of business help your business stay profitable.
Unfortunately, they also make it harder to value, which can drive away potential buyers.
You look at your business and see an integrated whole. A buyer may only understand one aspect of the business, so they see it as fragmented or view certain assets as liabilities.
You can help keep a buyer interested by separating your business assets into clear divisions. This will help buyers get a clearer picture of the benefit of acquiring your business, which may lead them to offer more.
4. Know the Value of Your Business
With that in mind, it’s vital that you know the value of your business before you try to sell it.
Specifically, you should understand the value of your business from a buyer’s perspective.
The best way to do this is through a business valuation. This will keep you from fixating on a specific sale price from start to finish, and thus keep you from leaving buyers’ money on the table.
Get in touch with an appraiser and ask them to draw up a detailed explanation of the business’s worth. This will add credibility to your asking price.
5. Reason for and Timing of the Sale
Buyers will want to know, so you should figure out the reason and timing for the sale of your business before you sit down with a buyer.
Owners sell businesses for any number of reasons, though these are among the most common:
- Becoming overworked
- Partnership disputes
- Illness or death
All of these are reasons that a buyer will generally accept at face value. On the other hand, if you’re trying to sell your business because it’s no longer profitable, you’re going to have a much harder time bringing in buyers.
Part of these considerations is the timing of the sale. Ideally, you should start to prepare for the sale a year or two ahead of time so that you can make your business appear more attractive in the meantime and get everything in order before you initiate a sale.
6. Put Together the Right Team
If you’re looking to get out of your business, the last thing you probably want to do is pay an outside team to come in and help prepare for the sale, since it will only cost you money.
This is a critical mistake.
Recognize up front that you, as a business owner, are probably the worst person to negotiate your own account. You want an impartial third party that will look at the facts without emotional attachment.
With that in mind, don’t hesitate to assemble the right team to help with the process. If needed, bring on specialists who know how to deal with large buy/sell transactions.
7. Create an Exhaustive Letter of Intent
Finally, you should make sure you create a comprehensive letter of intent before you start a sale.
Everything you care about should be included in the letter. If everything is covered, it gives you much greater leverage in negotiations. For example, if a buyer’s team attempts to erode the deal, you can refer them to the letter–the buyer will have to justify signing a letter if they didn’t expect to honor the terms.
Thinking of Selling Your Business?
If you’re thinking of selling your business, the last thing you should do is make it up as you go along.
Instead, get an attorney on your side who knows their way around these types of deals. That’s where we come in. We’re experienced business lawyers who will help you chart the best course of action for your business.
If you’re making dinner or helping your kids do math homework, the last thing you want to think about is mortality.
Unfortunately, you’re not alone – 64% of Americans don’t have a will, and 27% said there was no urgent need for them to get one.
But will and estate planning are vital to ensuring that your assets and estate are handled properly after your death. To help you make sense of it, here are nine estate planning mistakes to avoid.
1. Not Having a Plan
On the top of the list? Not having any estate plan at all.
As you can guess, this is a pretty common problem. Most people don’t think they have enough assets to make a will or estate planning worth the trouble.
This is a huge mistake. If you don’t have a will or any form of estate planning, the courts will decide how to transfer your assets to a living beneficiary, a process called probate.
This can be a long process, especially if there are any complications in your estate (hint: there usually are). It’s also an expensive process, with court fees, personal representative fees, attorney fees, accounting fees, appraisal and valuation fees, bond fees, and more.
2. A DIY Estate Plan or Will
But before you get ahead of yourself, a DIY estate plan or will isn’t any better than having no will at all.
Sure, there are plenty of websites that will give you DIY forms, and some of those forms may be correct. But unless you know how to fill them out and file them correctly, or even what forms you need, they won’t be sufficient as a will, power of attorney, or other vital documents.
Which means your assets wind up back in probate, and you’re in just as much of a mess as you would have been with no plan at all.
3. Not Understanding How Assets Pass On
Pop quiz: all of your assets pass through your will, right?
Because most people hold most of their wealth in life insurance policies or retirement funds, most assets cannot pass through a will.
Real estate, on the other hand, can pass through wills, which is good news because the house is the most valuable thing most people own outside of a retirement fund.
If you don’t know anything about how your assets pass on, guess what? Your assets will land back in probate court after your death.
4. Not Handling or Reviewing Paperwork
On a related note, failure to properly handle or review the relevant estate planning paperwork is another huge issue that most people encounter.
Let’s say you named your sister as the beneficiary of your life insurance and retirement while you were single. That’s all fine and good.
Now let’s say that you got married. You changed your will and assumed everything would be fine.
Here’s the problem: if you didn’t change beneficiary designations on your life insurance and retirement, your sister will receive most of your estate, not your spouse.
5. Not Planning for Disability
In much the same way that people don’t like to think about their mortality, they also don’t like to think about the possibility of future disability.
That’s a big problem for estate planning.
If you don’t have anything like a living trust set up in the event that you are unable to make decisions for yourself, major decisions like managing your finances, raising your children, or healthcare decisions on your behalf are left out of your control.
6. Not Funding Your Trust
And speaking of trusts, not funding your trust is another estate planning sin that many people are guilty of.
It’s a good first step to have a trust. But a trust is like a suitcase. If you don’t put anything in it, you’re passing an empty suitcase to your beneficiaries and leaving the rest up to chance.
In other words, trusts are only as good as what you do with them. If you do nothing, well, they aren’t going to do you very much good.
7. Planning Your Estate Around Specific Assets
There’s been a lot of talk about assets going on here, which means you may be tempted to try estate planning based on certain specific assets.
Unless there is an unusually compelling reason for a specific asset to go to a specific person, resist the temptation.
For example, let’s say you have three children, and you want them to share your assets equally. One receives half your home, another is added as the beneficiary of your life insurance, and the third is added as a signer on your bank account.
That’s all fine assuming that nothing changes between now and when you die. But if you, say, sold the house or let the life insurance lapse, whatever child was supposed to receive those assets will get nothing.
8. Beneficiary Designations and Joint Accounts
On that note, let’s talk about beneficiary designations and joint accounts.
Beneficiary designations are useful, especially when it comes to life insurance and retirement funds.
The problem is that some beneficiary designations can override your will. Remember, your will doesn’t control retirement accounts or jointly owned accounts, which means that you may be leaving a sticky situation behind for your beneficiaries to sort out.
9. Keeping Secrets from Your Estate Planner
Finally, the greatest mistake in estate planning: even if you do everything else right, keeping secrets from your estate planner can throw off your best-laid plans.
Keeping secrets from your estate planner, or only providing them with vague or incomplete details regarding your finances and family, is like lying to your lawyer. You can do it for the sake of your dignity, but you’re the one who will be hurt in the long run.
The whole point of an estate planner is to provide you with an appropriate strategy to protect your family after your death. It’s difficult for them to do that if they don’t have an accurate picture of your situation.
Making Sense of Will and Estate Planning
With all of this in mind, one of the best things you can do in terms of your will and estate planning is to have a professional on your side.
Rhodes Law Firm PC offers estate planning in Augusta and Aiken, whatever your needs may be.
Have you recently acquired a substantial amount of wealth? Are you considering donating some of the money to different charities?
Whether you’re looking to donate a large amount of money or simply make a small donation, planning your charitable contributions is important.
If you don’t plan properly, you could end up donating money to an illegitimate charity or another scam, or make a donation that doesn’t end up being tax deductible when the end of the year rolls around.
These two mistakes are all-too-common, which makes planning your charitable gifts even more important.
Below are 10 helpful tips for donating money to charity, so you don’t make any mistakes with your money.
1. Pick a Charity That’s Important to You
Before you can donate your money to a charitable organization, you have to find one.
Think about what’s important to you. What causes really fire you up? If you could change anything in the world, what would it be?
Whether you’re passionate about ending domestic violence, sex trafficking, or world hunger, there’s a charity that will happily accept your monetary donations. After you have made a decision on where you want to focus your donation, it’s time to decide if you’re going to keep your donation local, regional, national, or international.
The great thing here is that it’s completely your call. It is your money, after all. No one can tell you where you have to donate.
2. Verify the Legitimacy of the Charity or Charities You’ve Chosen
When you’re donating money to charity, this is a crucial step.
If you don’t verify that the charity is, in fact, legitimate before you donate, you could end up donating money to an organization that uses more of your money to line their pockets than it does to feed the children. Or worse, you could donate it to a corrupt organization or person whose sole reason for collecting donations is to profit off of them.
Neither of those situations would be your preferred outcome.
If you want to avoid donating to a scam, you can use the following two websites to verify the credentials of your chosen charity:
Both of these organizations vet nonprofits so you don’t have to.
This is a simple step, but when it comes to charitable planning, it’s not one to take lightly. Don’t skip it, or you may end up throwing your money away.
3. Keep an Eye on Their Administrative Expenses
Before donating your money, it’s a good idea to confirm that it’s going to be spent wisely.
Of course, charitable organizations will have administrative expenses just like any other organization, but it’s important to ensure that the money used for these expenses does not outnumber the amount of money that they are using to fund programs. If you pull their reporting and find that their contributions to expenses are far beyond those to their programs, there’s a problem.
Save your money and find a different charity to donate it to. Preferably one that values their programs more.
4. Make Your Money Work
If you donate to the same several charities, your money will go farther than if you donate smaller amounts to many different charities. Why? Many charities have fees they will deduct from your donation, meaning less of your money is going directly to the cause you’re looking to support.
5. Donate Directly to the Charity Itself
In other words, don’t donate money over the phone to a solicitor you don’t know. There’s always a risk that they might not be legitimate and could be taking the money they receive and profiting off of it.
6. Itemize Your Donations
To claim a deduction on your taxes, you need to itemize it. When it comes time to file them, you can use Schedule A on the form 1040 to itemize each of your deductions. Be sure to include your donation on lines 16-19.
7. Donate to Qualified Organizations
If you’re hoping to deduct your donations from your taxes, you’ll need to donate your money to qualified organizations which are determined by the IRS.
If you want to confirm the status of a charity, call the IRS.
8. If You Want to Deduct Your Donations, Donate to Organizations, Not Individuals
No matter how much the individual needs or deserves your contribution, you won’t be able to deduct donations to individuals on your taxes. Keep this in mind if you want to be able to deduct your donations, and donate only to the qualified organizations mentioned in the previous tip.
9. Get a Receipt
Are you looking to make a charitable donation in cash? If you are, and you want to claim it as a deduction on your taxes, you’re going to need to have a receipt to back it up.
Be sure that it includes the date, the amount of the donation, and the name of the charitable organization that received the money. To claim a deduction, you’ll need to donate $250 minimum and then have the qualified organization provide you with a form of acknowledgment.
No matter what amount you donate, don’t forget to ask for a receipt!
10. Deduct Expenses Related to Volunteering
If you’re considering donating to charity, you may also be considering volunteering.
While your time is not tax-deductible, any expenses you incur as a result of volunteering are. See tip #9 and always get a receipt.
Some Closing Words on Donating Money to Charity
Donating money to charity is a great way to relieve yourself of extra funds while also doing something that will benefit a good cause.
To donate the smart way and ensure that your charitable gifts are, in fact, tax-deductible, just take these tips into account before making your next donation.
If you’d like some assistance with your charitable planning efforts, don’t hesitate to contact Rhodes Law Firm today.
Our team will work with you to ensure that we answer each of your questions and can provide you with the help you need.
So you’ve worked all your life to create a legacy. Did you know that all your hard work can disappear?
This can happen if you’re sued or upon death, even when you’ve created a trust to shield your assets. Yes, that’s right. Even when you plan ahead your assets could be seized.
Trusts can be great tools for creditor protection, but only if you do it the right way. If you are here it means that you want to protect your assets, but want to make sure you’re doing it right.
Now the question is, are trusts protected from creditors?
Creditor Protection: Where to Start?
Before we get into if trusts are protected from creditors, we’ve to start with the basics. What is a trust? How do they work?
A trust is an arrangement where the settlor or trust maker transfers the ownership of their assets, to be managed by a trustee, for the benefit of a person or group of people, also known as beneficiaries. The 2 most common types of trusts are revocable living trust and irrevocable trust.
A revocable living trust is a trust that’s created while you’re alive. The purpose of this legal document is to provide the instructions on how your assets will be handled when you pass away. It’s different to a will because it can prevent the court from controlling your assets, and avoid probate upon death.
Also in a revocable trust, the settlor keeps the control of the assets. While an irrevocable trust, the trust maker loses the ownership of the assets. Another thing that makes it different is that it can’t be amended or revoked.
How Do Trusts Work?
Many people get wills to establish how their assets will be handled when they pass away. But, a lawyer might recommend a trust instead. They might suggest a revocable trust or an irrevocable trust.
You might be asking yourself, how do these work? A revocable trust can be established tying it up with your will. Many lawyers advise their clients to do this because it saves their family members court proceedings.
This process is known as probate. If there’s a will, it will have to go through the court probate process to confirm the distribution of the assets. This process can take from 6 months to a year and can cost your survivors from 3 to 5 percent of the assets.
Also, this type of trust helps in case you’re incapacitated, because if this happens your trustee will handle your assets in accordance with your trust provisions. This means that the court won’t assign an administrator, and your wishes will be followed.
In a revocable trust, you keep the ownership, and control over your assets. This is different in an irrevocable trust because the court won’t consider you the owner of the assets. It’s like this because you will lose all control and ownership of the property included in the trust.
Are Trusts Protected from Creditors?
You might be asking yourself, will a trust protect my assets? The answer is yes, but not all trusts are created equal. Not all types of trusts can protect your assets from creditors.
The only type of trust that can protect your property is an irrevocable trust. Once you put your assets in this trust, you aren’t the owner or control these assets anymore. Therefore, you can’t modify how they’re distributed.
Since you aren’t the owner of the assets, when there’s a judgment from a creditor against you, they won’t be able to seize the property that’s included in the trust.
Why Should You Establish a Trust?
There are many reasons why you should create a trust, but the most important is to protect your assets. If you want to do this is because you want to be prepared for when or if the worse happens.
In the event that lawsuits against you or even death occur, a trust can protect your assets from creditors and people who want to take advantage of the situation.
If your assets are in a trust, the courts and creditors can’t seize those assets. Yet, they could go against the assets that aren’t in the trust. This only applies to irrevocable trusts.
It only applies to this type of trust, because it creates a separate legal entity with control and ownership over those assets. The court and creditors could still seize your property, but only the assets that aren’t in the trust.
Many people think that having a will guarantees that their wishes will be followed when distributing their assets. Yet, even if there’s a will there are complications that can happen.
Besides the fact that a trust will help avoid the long probate process. These can prevent debts not being paid off, certain heirs receiving more than you intended them to receive, money designated for charities of being distributed elsewhere, among other possible issues.
Cost-Effective Creditor Protection
Another option you may consider to be prepared in the event of death is a testamentary trust. This trust is programmed to be created upon death and will include your life insurance policy proceeds, or all the assets of your estate.
Some people prefer this type of trust because it will protect your assets after death, without all the costs involved in the maintenance of a trust. But, it will also allow the distribution of your assets without them going through the probate process, or causing any financial hardship on your loved ones.
Wrapping It Up
You shouldn’t have to continuously worry about your assets being seized, or end up in the wrong hands. If you’re in the process of writing your will or are looking for ways to protect your assets now you know that trusts are protected from creditors.
Remember that you’ll get creditor protection only if you leave your property in an irrevocable trust, or a testamentary trust if your purpose is protection upon death. Make sure to consider these types of trusts when you decide to secure your family’s financial future.
Are you planning on getting a trust to protect your assets? We can help!
Contact us for more information about our services.
At Rhodes Law Firm, we would like to share with you our newest member to the team – Colby Bouchillon, Associate Attorney!
Colby is a native of Aiken, South Carolina. She earned a Bachelor of Arts degree in Political Science from the University of South Carolina – Aiken in December 2013. She continued her education at Emory University School of Law in Atlanta to earn a Juris Doctor degree in 2017.
Colby is a member of the Augusta Bar Association and is licensed to practice in Georgia. Her areas of focus are:
In her free time, you can find Colby rooting on the Atlanta Falcons or spending time with her nieces and nephew!
Have you ever looked at a Medicaid form, Long Term Care insurance costs, or tried to write your own will and asked, “What does this mean?”
Probably so. There are many areas when planning for your future that can become confusing and frustrating. With that said, you run the risk of potential errors that can really make things difficult down the road. This is why we recommend hiring an elder law attorney.
For those who aren’t entirely sure of what what that is, elder law is an area of legal practice that specializes on issues that affect the aging population.
Elder law attorneys are here to help with these complex situations. Maybe you’ve gone through a divorce, remarried, have a business, or a spouse that will need long term care in the near future. Tackling these areas on your own can not only be confusing, but highly overwhelming. Hiring an elder law attorney will help ease the stress, avoid potential errors, and when it’s all said and done – give you peace of mind.
Are you and your family ready to start planning ahead in the most effective way? Feel free to contact us to make an appointment. All of us at Rhodes Law Firm are here for you and your family’s needs.
“Start saving for retirement today!”
What feelings arise after reading that?
For some Americans, positive responses or emotions will follow. However, the rest of full-time American workers – not so much. CareerBuilder sent out a report recently that shows 78% still live paycheck to paycheck. So, the big question here is: How is one supposed to save if there’s no money to actually save?
Ways to Save For Retirement
With discipline and an eye-on-the-prize mentality, there are ways to save for those who live paycheck to paycheck:
- Trim Your Spending
- Change Your Spending Perspective
- Find a Side Gig
- Control Your Debt
- Use Your Employee Benefits
- Open Your Own Savings Vehicle
Follow the link to read the full article on how this can help you get on track with planning for your retirement!
Once you’ve got this in order, you can contact us to get your Estate Plan started!
One of the biggest mistakes you can make when it comes to estate planning is to assume you do not need to plan.
Estate planning is all about deciding in advance and naming whom you want to receive your assets after your death.
Deciding early on how to distribute your assets will not only keep you in control of everything you’ve worked hard to achieve but also minimize squabbles among family members.
Estate planning is not only for the wealthy. It’s for everyone who wants to make sure their family and loved ones are adequately provided for, should the unthinkable happen.
Here are the five estate planning benefits you should know.
1. Peace for Everyone
You probably have heard horror stories of warring family members, where the war began soon after the death of a major pillar of the household.
Such situations arise when family members cannot reach a consensus as to who should be in charge of finances, real estate, and more. Such squabbles bring hatred among family members and are in most cases arbitrated in a court of law.
But where an estate plan exists, family squabbles are avoided.
Estate planning allows you to choose who should control finances and other assets after you die. This goes a long way towards settling any family disputes that may arise and also ensures your assets are handled the way you intended.
2. Avoiding Probate
When you die, your estate goes through a process that involves settlement and distribution of your assets in accordance with the terms of your will. This is known as probate and can be a lengthy and costly process.
The longer the probate process takes, the more costly it becomes, leaving your loved ones with less than you intended. This explains why most people try to avoid probate in any way possible.
Even with an estate plan in place, your beneficiaries will have to go through a type of probate to distribute those assets. However, not every probate is coordinated by the courts.
Some of the decedent’s property is not considered part of the estate, and therefore, not distributed through probate courts. These include trusts not established by a will, retirement accounts, insurance policies and jointly owned property.
The major ways your property can be settled outside probate courts include putting the property in a trust or by joint property ownership.
Avoiding probate coordinated by courts is one of the key estate planning benefits.
3. Transfer Property to Your Loved Ones Quickly
When you die without an estate plan, your family and loved ones could wait for months to get anything from you.
Estate planning helps to avoid the big delays that can put a financial strain on your loved ones.
With a good estate plan, your family gets all the resources they need to pay for outstanding medical bills, and for anything else that may come up.
4. Reducing Estate Taxes
Estate planning not only seeks to protect your loved ones from financial strain, but also from big tax hits.
By transferring your assets to your heirs, you also put your focus on creating the smallest tax burden for them as possible.
Without an estate plan, the amount your heirs will owe the state could be considerably high.
5. Protecting Beneficiaries
One of the key reasons people prepare an estate plan is to ensure their beneficiaries are taken care of.
If the beneficiary is a minor, you’ll need to designate a guardian and a trustee in the will to oversee his or her wellbeing. Without such a plan, again the court will step in to determine who will raise your children.
If the beneficiary is an adult and is bad at managing finances, you can set up an estate plan that will protect them from making bad decisions.
Wrapping Up on Estate Planning Benefits
Without an estate plan in place, there could be a long-lasting impact on your family and loved ones. And not only for your loved ones but for you too.
Suppose you become incapacitated or suffer a stroke, who will pay your bills or manage your healthcare. A power of attorney designation and a well-drafted living trust package can help to protect you and your family.
If you have any questions on estate planning benefits or need help to update an existing plan, don’t hesitate to get in touch with us.