Imagine if something happened to you tomorrow; how would your family be provided for? If you have loved ones-spouses, children, parents, etc., who are dependent on you for financial support once you pass on, then your estate may need some protection.
Here are seven tips to protect your estate and help prevent probate:
1. Get the Right Estate Planning Documents
Although wills, trusts, and living wills are necessary to plan your estate properly, they do not provide for your loved ones.
Without a durable power of attorney document naming an agent to make health care decisions, if you become incapacitated and designating someone to handle financial matters in case you become unable, your family may suffer irreparable harm.
Be sure that all necessary powers of attorney are updated regularly-when something changes (i.e., marriage or divorce)-and your estate planning documents are complete and up-to-date.
2. Avoid Joint Accounts
Transferring ownership of your jointly held accounts into a revocable living trust can help prevent probate should you pass.
Without taking this step, the co-owner will be able to easily take out funds and make withdrawals upon your death without restrictions.
3. Keep Your Financial Information Current
It would help if you didn’t wait until you have been diagnosed with a life-threatening illness or injury to inform your financial institutions about any changes in your estate planning documents (e.g., new powers of attorney).
Although you may have completed all necessary estate planning documents, leaving them unchanged can lead to unnecessary bickering between family members.
Be sure that your estate planning documents are kept current, so everything is in order whenever there is a change in the people who will manage your affairs, whether it is due to a birth, death, or marriage.
4. Don’t Forget About Your Pets!
Pet trusts are for pets who leave behind property upon their death (i.e., dogs or cats). A trust can be created during your lifetime to provide for the care of one or more pets.
The trustee will have full authority to decide how best to spend the money within the trust for your pet’s benefit after you pass away. Trust funds can also be used to pay any veterinarian bills incurred while caring for your pet(s), as well as expenses related to preserving your pet’s remains through cremation or burial.
Without this type of plan in place, it could be difficult for your loved ones to cover these costs when you are gone.
5. Don’t Forget About Your Pension!
Formally transferring the ownership of your retirement accounts into an IRA or another type of trust can extend their tax deferral status and provide for added protection in case of divorce, bankruptcy, lawsuit judgment awards, or creditor claims.
Trusts are also beneficial if you want someone other than yourself to control your assets after death. A joint estate planning strategy is used by parents who want a say about how their children’s inheritances will be spent.
In addition, retirement plans left to minor children may be subject to probate court approval before any funds can be distributed.
6. Keep Good Records
Ensure that you have a list of all your estate planning documents and where they can be found. If your loved ones need to find these documents in the event something happens to you, they must know precisely where to look.
You should also include information on how beneficiaries should contact reliable estate lawyers and who holds any safe deposit box keys so all necessary documentation can be located quickly.
7. Remember Your Loved Ones’ Needs
Remembering your loved ones is what estate planning is really about! In addition to avoiding estate taxes, estate planning is a way for you to provide for your loved ones after you pass away.
Without proper estate planning documents in place, estate taxes could eat up a substantial portion of your money. If this is not what you want and it definitely isn’t what your family members want-then estate planning is key.
Remember that your estate plan is only effective if the document is readily available and up to date. If you have minor children, then that means your plan should be readily available to them when they turn 18. The person in charge of this task can be responsible adults, such as family members, spouses, or legal guardians.
The article above may be helpful to you in thinking about estate planning and how it can affect an estate’s plans in the future. Hopefully, you have found this information useful in jumpstarting your estate planning process.