Estate planning, or what some people refer to as legacy planning, entails preparing your affairs for the future, including death and other life events. While older adults might give more thought to estate planning, it is an essential tool at any age and any asset level.
Why It’s Important
With estate planning, individuals and families can protect their interests after death or incapacity.
- You can provide for spouses, children, and dependent family members when you pass away.
- You can arrange care and financial affairs should you suffer a severe accident or illness that renders you incapacitated.
- If you are a parent, you can nominate a guardian to care for and manage the inheritance of your minor children.
- If you own a business, you can prepare to transfer it to family members, colleagues, or other trusted individuals.
- You can make arrangements for your long-term care when you can no longer live on your own.
- You can also make funeral preparations, determine what happens to your body when you pass, and prepay for your funeral, all of which can help lessen the burden on your family members.
What Is an Estate?
Estate planning entails passing on your estate to others. Your estate is everything you own, including:
- Savings and checking accounts
- Retirement accounts
- Investments
- Life insurance
- Annuities
- House and other real estate
- Car
- Personal possessions, such as jewelry, furniture, and sentimental items
When you die, your estate encompasses all your property upon death. If you sold or gave away property before death, it is no longer part of your estate, and you cannot transfer it upon death.
Items you own with another person are also part of your estate. Depending on the type of asset, it might automatically pass to the other owner. For instance, if you own a home with your spouse as tenants by the entirety (a type of ownership available to married couples in some states), it will pass to your spouse upon your death. Also, assets for which you have completed beneficiary designation forms will pass according to those designations.
What Is an Estate Plan?
An estate plan consists of legal documents and arrangements that determine the distribution of your assets when you die or outline your care if you become incapacitated.
While a will can be a central component of an estate plan, some plans will encompasses more than a will. Some plans include legal tools that allow assets to pass outside of the probate process. (The probate process is the process by which a court oversees the distribution of assets in a will).
Estate Planning Tools
In addition to your will, your estate plan could include the following:
- Purchasing jointly owned property or adding a joint owner to your property
- Designating a beneficiary on a pay-on-death bank account, retirement account, or annuity
- Buying life insurance to benefit your family should you pass away
- Creating a trust for a child and/or a trust to avoid probate
- Obtaining long-term care insurance to cover future nursing home or assisted living fees
- Executing power of attorney documents, naming health care and financial agents
- Making a living will, providing instructions for care should you become incapacitated
- Preparing a transfer on death instrument to pass ownership of your property to a beneficiary upon death
What Is an Estate Planner?
As professionals helping people make future arrangements, estate planners are attorneys who focus on end-of-life preparations. Estate planning attorneys assist people with drafting legal documents and understanding laws and taxes that could affect them and the loved ones they will leave behind.
When creating estate plans, individuals may need to consult attorneys as well as other experts, including financial planners, accountants, life insurance advisors, bankers, and real estate brokers.
Do I Need a Lawyer for Estate Planning?
Although the law does not require that individuals secure legal representation to make estate plans, many find the support and guidance of estate planning attorneys invaluable. An estate planning attorney can help you identify the legal tools and strategies that suit your needs, as well as draft the necessary documents, such as wills, trusts, and powers of attorney. An estate planning lawyer can help you preserve your estate’s wealth and may work with tax professionals.
At Linville Law Office, PLLC, our team strives first to educate clients as we help them achieve their personal planning goals. No two families are the same, and understanding your plan is very important. Whether you are just starting out, have young children, or are on the cusp of retirement, the goal should be to have an estate plan that meets you where you are in life and looks a few years into the future. If you need to begin planning or update an existing plan, give us a call today. We're conveniently located in south Charlotte for in-person and virutal consultations.
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