People are often unaware of the benefits of preparing wills. Many believe that they only need a last will and testament if they have valuable assets that they want to pass on to their heirs upon death.
People who put off preparing wills may very well leave a mess for family members to take care of. Instead of choosing an estate administrator and beneficiaries to receive inheritance gifts, the estate will be overseen by a probate judge because no directives were provided.
Succession is necessary to document a person’s death and liquidate their estate. If a person executes a last will and testament, their property can be turned over to whomever they wish through a process known as a testamentary will. Without a will, estates are settled in accordance with state law through a process known as intestate succession.
The probate process is quite lengthy and generally takes several months. Assets cannot be transferred to beneficiaries until the estate is fully reconciled. During this time, property values may depreciate, but beneficiaries must pay inheritance tax based on the value date of death.
Additionally, if the deceased did not participate in estate planning to cover settlement costs, the trustees may have to sell assets to pay outstanding debts, court fees, and legal services.
The preparation of a will does not allow the estate to avoid succession, but does provide guidance on conciliation procedures, beneficiaries, personal representatives, and the distribution of assets.
The only way to ensure that the heirs receive ownership of the estate without delay is to establish a revocable trust. Since property held in trusts is no longer owned by individuals, it is not considered part of your estate. Trust property is exempt from probate and can be transferred to beneficiaries expeditiously.
There are many types of trusts, but each requires a last will to provide directives regarding property ownership. A trustee is chosen to handle the liquidation procedures and distribute the assets to the designated beneficiaries.
Certain items cannot be placed in trusts. Therefore, individuals must execute a “discharge” will and designate beneficiaries to receive their property. Items included in extra wills include clothing, collectibles, household belongings, and property with sentimental value.
The most practical way to protect assets and pass them on to future generations is to work with an estate planning law firm. Attorneys can offer guidance and help clients understand the benefits and drawbacks of each estate planning strategy.
Before consulting with attorneys, it can be helpful to prepare a list of objectives, along with any questions you may have. Addressing the following questions may also be beneficial:
• What type of assets do you own and what is the appraised value?
• Do you own real estate located in another state?
• Are you a business owner and will the business pass into the hands of a successor?
• Who will become the legal guardian of the minor children?
• Do you want to establish a trust fund for children?
• Who will receive the assets from your estate when you die?
• Do you have life insurance policies?
• If your estate has to go through an estate, have you set up a financial account to pay outstanding debts and probate expenses?
While establishing a comprehensive estate plan can be time consuming, it is worth the effort to protect your family’s legacy. Those who have had to resolve an intestate probate will attest that it is a frustrating and complex process.
Instead of adding stress to your loved ones during a difficult time, make the effort to put together an estate plan and execute a last will. Doing so will not only make things easier for those left behind, but it can also reduce the inheritance and inheritance tax liability for heirs.