Talking about the estate planning process is always a difficult discussion. However, it is also a very important discussion to have.
Without going through the estate planning process, you may make the process more difficult for your beneficiaries. And you will fail to have your wishes executed correctly in the event that you pass.
60% of Americans have done almost no estate planning and this oversight can cost time and money down the road for heirs. It’s definitely not the situation most people hope for when they imagine how their assets will be passed along.
There is a lot of mystery and confusion that often surrounds estate planning. Sorting through all of the information available can leave people feeling overwhelmed and frustrated.
In this article, we will do away with some of the mystery to provide you with essential estate planning facts.
With the right information at your fingertips, you will be able to start the estate planning process with a clear mind and a clear path forward. Afterward, you will feel much more confident that you have given your family an easier situation to manage.
1. A Will is Just the Beginning
Many people believe that creating a will is the only thing required when estate planning. The truth is that creating a will is only one small step in the estate planning process.
The purpose of a will is to dictate how your assets will be divided. This document can also be used to provide guidance to your executor when managing other areas of your affairs.
In most jurisdictions, a will must go through the probate process to ensure it is valid. This is a legal process in the court system that can delay the process of distributing assets.
While it is important to create a will, it is equally important to understand that a will is not the only thing needed to ensure your wishes are carried out quickly and stress-free.
2. Estate Planning Saves Heirs on Taxes
Ensuring your loved ones get your belongings and assets is just one part of estate planning. The other aspect is ensuring that your loved ones are not left with a hefty tax bill in return for receiving your assets.
State and federal inheritance taxes can quickly add up. They take a significant amount of your estate while leaving heirs with an unexpectedly large tax bill. This tax obligation can be a big surprise and a very stressful situation.
Luckily, there are estate planning tactics that allow you to reduce the tax bill for your heirs. Charitable donations are just one way to help reduce the tax bill left behind after your passing.
3. A Trust Can Save Time and Stress
As mentioned, many people believe that creating a will is the best way to ensure that their assets are given to the right people. Depending on the type of assets in question, a trust may be a more effective way to ensure your loved ones receive their inheritance quickly.
One of the main benefits of a trust is that the assets in a trust avoid the probate process. This can greatly speed up the time it takes to ensure the right assets make it into the hands of the right people.
The reason a trust is so effective is that the people named in the trust actually become the owners of the trust upon the owner’s passing. Transfer of ownership occurs much more quickly and there are less legal issues for your family to sort through.
Of course, a trust is only helpful if you actually take time to set one up before you pass.
4. Estate Planning Can Reduce Family Arguments
One sad reality of the passing of a family member is the arguments and legal battles that can arise among surviving members. Family members will argue over who gets what, how much, and when. This can be devastating and only serve to add extra stress after the passing of a loved one.
If you hope to leave a positive memory in addition to your assets, estate planning helps prevent family members from getting involved in ugly legal battles, which cost time, money, and fray family bonds.
Take time during the estate planning process to ensure you choose someone to manage your estate the way you hope it would be, even if that means finding someone who is not a member of the family. This is something you’d want to indicate as well.
In any case, you will want someone who can objectively carry out your wishes without allowing emotion and arguments to cloud their vision.
5. Naming Beneficiaries of Financial Assets Can Save Time
As you can see, much of the estate planning process has to do with helping your loved ones avoid long, drawn-out procedures after your passing. Ensure you have the names of your beneficiaries on all of your financial assets and accounts to simplify the process.
When a financial institution has a named beneficiary on an account then the account is able to avoid the probate process in most cases.
Going through all of your financial assets individually is a great exercise to ensure that nothing is missed.
If any financial assets that are missing a beneficiary designation, then you can rectify the issue quickly. This small exercise could save untold hours of time for your executor and beneficiaries after your passing.
You’re Not Alone in the Estate Planning Process
One of the most important things to remember about estate planning is that you are never alone. At Mooney Lyons, we work with families to help them plan and ensure their assets are managed in the way they wish after their passing. We can help ensure that your heirs are not burdened by large tax bills and drawn out legal battles.
If you want to leave behind a positive legacy, then one of the first steps is professional estate planning. Contact our estate planning experts today to book your personalized appointment.