Estate planning is a crucial aspect of planning for your future. Including estate planning in your New Year’s resolution for 2024 can be highly beneficial for many reasons such as asset protection, avoiding probate, and planning for incapacity. Without a proper estate plan, state laws will determine how your assets are divided upon your death, which might not align with your personal wishes.
Protect Your Assets
Asset protection ensures that your property and financial assets are distributed according to your specific desires. Without a proper estate plan, state laws will determine how your assets are divided upon your death, which might not align with your personal wishes.
Avoiding Probate
Probate can be an expensive and lengthy process, sometimes taking months or even years to resolve. The process involves court fees, legal fees, and other costs that can diminish the value of the estate. By having an estate plan, you can streamline the distribution of your assets, avoid unwanted costs, and ultimately save time and money for your beneficiaries. A Revocable Living Trust is a great estate planning tool that can bypass the probate process. Property placed in a revocable living trust is not administered through the Probate Court. The trustee can directly transfer assets to the beneficiaries according to the terms of the trust.
Planning for Incapacity
Estate planning is not just about asset distribution after death; it also involves planning for potential incapacity. Tools like powers of attorney and healthcare directives ensure that your financial and health-related decisions are made according to your preferences if you are unable to make them yourself. A durable power of attorney document allows you to appoint someone you trust (an agent) to manage your financial affairs if you become incapacitated. The “durable” aspect means that a power of attorney remains effective even if you become mentally incapacitated. A healthcare proxy designates a person (your agent) to make medical decisions on your behalf if you’re unable to do so. This includes decisions about medical treatments, health care providers, and end-of-life care.
Charitable Giving
If charitable giving is important to you and is one of your New Year’s Resolutions, estate planning allows you to set up structured contributions to charities in a manner that can also provide tax benefits. One of the simplest ways to leave a charitable legacy is through a bequest in your Will. You can specify a certain amount of money, a percentage of your estate, or particular assets to be given to a charity or charities of your choice. In addition, there are two main types of charitable trusts, Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs). CRTs provide an income stream to non-charitable beneficiaries for a period, after which the remainder goes to charity. CLTs, on the other hand, provide income to a charity for a set period, with the remaining assets eventually passing to your heirs. Both types of trusts offer tax benefits and can be tailored to meet specific philanthropic and financial goals.
Updating Existing Plans
If you already have an estate plan, the new year is a good time to review and update it. Life changes such as marriage, divorce, births, and deaths necessitate revisions to ensure the estate plan remains aligned with current circumstances.
Conclusion
Knowing that you have a plan in place for your assets and your health can provide peace of mind to you and your loved ones. Given the complexities involved in estate planning, consult with an experienced attorney. They will be able to create a plan, using trusts that are best suited for your unique situation. If you would like to discuss your estate plan, contact our team at Legacy Counsellors today. Email us at info@legacycounsellors.com or call us at 413-527-0517.