Estate Planning 101
Planning ahead of your death can be one of the most beneficial things you do for your family and friends. By creating a full and thorough estate plan, you have the ability to transfer your assets to your loved ones beyond death. An estate plan consists of a variety of documents and aspects that permit you to decide how to handle your property. The top attorneys over at JUSTLAW helped us formulate a list of the top six things you must do in order to have an efficient estate plan.
1. Execute a Last Will & Testament
This document is the cornerstone of your estate plan. There is no point in going through the rest of the steps, if you do not have a last will. It is a vital part of your estate plan.
A last will handles all of your property after your death. In the document, you have the ability to bequeath, or transfer upon death, every piece of property you own to a specific person. Take this opportunity to give your house to your children, your car to your wife, and your precious art collection to your best friend.
The reason as to why creating a last will is so important is because it avoids intestacy. The laws of intestacy are put in place as default rules in the event you do not create a last will. Every state has their own set of laws on intestacy. These laws favor relatives and thus may not be in line with your wishes. Therefore, if you do not create an estate plan, then intestacy will not see through that your best friend receives your art collection.
2. Execute a Living Will
Also referred to as an advance directive, a living will is a legal document that specifies the type of medical care you wish to receive in the event you become incapacitated and are unable to make those medical decisions yourself. In the document you can also express your wishes as to a variety of medical procedures including, but not limited to, cardiopulmonary resuscitation, mechanical ventilation (breathing tube), feeding tube, comfort care, dialysis, organ donation, etc. Do not let your family stress over what to do in this situation. Make your intent clear and fill out a living will for their benefit.
3. Power of Attorney
Next, you should designate someone as your power of attorney. A power of attorney, or durable power of attorney, is a document that empowers someone to act on your behalf. Generally, an estate plan consists of two of these positions: Health care power of attorney and financial power of attorney. The health care power of attorney is addressed in the living will. However, in the event you are incapacitated, you can designate someone as your financial power of attorney, to take care of your finances.
4. Create a Living Trust
Otherwise known as an inter vivos trust, a living trust gives you the ability to name beneficiaries to your designated assets. The advantage of placing assets into a living trust over a will is that the trust avoids the lengthy and expensive probate process. A detailed description of other ways to avoid probate, beyond creating a living trust, are beyond the scope of this article, but there are some good, free resources available online. With this document in place, the named beneficiaries can immediately own and control the designated property upon your death.
5. Protect your Digital Assets
Many folks spend significant amounts of time thinking about their personal property and how it would be handled in the event of their passing, but never give consideration to digital assets they’ve worked hard to create during their lives. The list goes on for the variety of ways that people use Instagram, Twitter, Tik Tok, blogs, and websites. These tools, when used correctly, can allow certain influencers to generate large online activity and, in many cases, significant revenue streams. State legislatures have gone a long way to helping folks protect these assets, as over 35 states have now adopted the Revised Uniform Fiduciary Access to Digital Access Act. Yet while the legislatures have offered citizens the tools to protect these assets, very few online entrepreneurs have done so using their will-based estate planning documents. Under a will you can protect these accounts by assigning a beneficiary to control each account. If you’ve worked hard to build your sphere of influence online or even if you’re just an average person who wants your family to hold onto your personal digital assets, you will most certainly want to consider protecting these digital assets as part of your estate.
For example, you have probably heard of the singer, Prince. He among many other famous celebrities, died without a will. His heirs have ensured that his crucial mistake of not creating a will stays in headlines for years and years to come. To date, not one of his heirs have inherited any of his estimated $200 million dollar estate. That all started thanks to a petition filed over four years ago back in 2016, initiating the case of In re the Estate of Prince Rogers Nelson. As part of his enormous estate, some of the more valuable assets include his numerous emails, tweets, social media accounts and other digital assets all owned in his name. In fact, it is estimated that as a result of this four year battle over Prince’s estate, both sides have built up administration fees upwards of $45 million. That is almost 25% of the worth of the entire estate.
Clearly it is extremely beneficial to create a will. Do not send your family into years and years of ugly disputes over something so simple. Please, create a will. Not only for your sake but for your family’s sake as well.
In some instances, both parents of a child pass away at young ages. As new parents, one of the first things you should do after the birth of your precious little one is complete guardianship forms as part of your estate planning. The forms ultimately designate people of your choosing who will become the child’s guardian. Stated more directly, the guardian you choose will care for your child until he/she reaches the age of eighteen, in the event you pass away while the child is still young. This is vital towards ensuring the safety of your child by placing them in the care of people you trust.
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This article was meant to provide you with a summary of some of the most important components of a comprehensive will-based estate plan. It’s clearly not a substitute for a good attorney, and shouldn’t be viewed as legal advice. Hopefully, this information helps you create a thorough estate plan. Remember to always keep it current by updating your beneficiaries and any newly acquired assets. In addition, talk to your loved ones about your estate plan. And finally, remember that affordable attorneys are available online to help you through it. The law was meant to protect you, so do your part to make that true.