A Learning Resource For Taking and Keeping Control Of Your Legacy
We all face the reality of upcoming health issues, possible hospitalization and disability, and planning for what we’ll leave behind for loved ones.
For many, it’s an uncomfortabletopic with unclear answers and open questions: Do you need more than a Will and Testament? What’s a Living Trust? Who makes my choices if I’m in the hospital and can’t communicate?
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What is Probate and/or Probate Court? What can happen if I don’t have a comprehensive plan? What do I consider at each stage of my plan? What documents do I need in my plan? What are some common myths I can debunk? When and how do I get started? What do I need to get clarity about the future of what I own?
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How to Control and Protect Your Assets with A Powerful Estate Plan
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Without a well-designed plan, your family may get stuck resolving everything you own in probate court. The state decides, based on its laws, whether probate applies. Then, a probate judge will administer and distribute your finances and estate based on state-defined rules-not your choices.
Why Do I Want To Avoid Probate?
You don’t decide, they do, and their decisions may not reflect your wishes. For example your state-defined legal heirs may not be the people you would choose to receive your property, and it may not be in the way you would give your property to them.
Beneficiaries can wait sometimes many months, and your people pay for the headache and hassle, all while going through the grieving process. Hefty probate fees, long waits, paying lawyers-these are avoidable pains.
What Happens If I Don’t Have A Comprehensive Estate Plan?
While you are alive, the wrong people may become in charge of you if you are disabled.
Imagine the courts appointing someone to be your guardian and conservator who you would not have picked. This happens frequently, especially for people who are not married or whose spouses are disabled or unable to act.
Even if the right person is put in charge of you, they may not know what you want or how you want to be treated. They may be left making hard decisions with no guidance from you. This not only leaves them in a stressful position but can lead to many family fights when other loved ones have different ideas of what to do around disability and end of life.
What Else Can Happen After I Pass?
If you don’t make your intentions clear with a trust and legal blueprint, brutal battles can break out over who gets what. These fights can last for years. And often these fights end without winners-except for the lawyers and courts who rake in fees.
If you have an estranged child, an ex-spouse, or a minor child that you don’t want to receive your property, it’s important to make an estate plan to lay out your instructions and wishes so the courts don’t decide.
Your legal heirs may not prepared to handle an inheritance.If they are not old enough, not mature enough, suffering from substance abuse issues, in a bad marriage, or other threats to their inheritance, an outright distribution through probate or beneficiary designation may not be the way you would want them to receive property. With a proper plan in place, you can help protect beneficiaries from spending the money unwisely or having it taken away in a lawsuit or divorce.
If you pass away without a good plan, those you care most about will suffer through an unnecessarily rough transition. The bottom line: A good plan ensures your family knows what you want done, when to do it, and who is in charge to make that transition as smooth as possible.
How Do I Get Clarity About The Future Of What I Own?
You need a powerful plan, a “legal blueprint” that defines how everything is handled when you are disabled or pass away. The right plan gives you the clarity, confidence, and power to:
Control your assets while alive and well.
Provide for your loved ones if you become disabled.
Give what you have left to whom, when, and the way you want.
Minimize tax bills and professional fees.
Assure your wisdom is transferred along with your wealth.
What Is An “Estate”?
Your ‘estate’ is everything that you own. This can include your home, cash accounts, retirement accounts, life insurance, stocks, vehicles, jewelry, and anything else you have.
Everyone has an estate, some bigger than others. Everyone benefits from a comprehensive Estate Plan as their “legal blueprint” for the future.
What Do I Consider At Each Stage Of My Plan?
Think of your estate plan as a roadmap for a four-stage journey that begins when you are alive and well and concludes when your beneficiaries receive your assets.
Prepare your plan before it’s too late. Act when you are not suffering from any mental disability. And make sure your plan does not lock away too much and keep you from using your assets as you wish when you are alive.
You may become disabled before you pass away. This is common, and you should prepare for it. Outline your wishes in advance. If you suffer from a mentaldisability such as dementia or Alzheimer’s, you would not be able to make decisions as to your financial affairs, legal affairs, or how you want to be treated by your health care providers. If others have to step in and make decisions, you want them to execute yourplan after consulting medical professionals.
The plan also grants authority to those youchoose to make necessary financial, legal, and medical decisions on your behalf.
You should decide: After your death, your property goes to whom you want, how you want, and the way you want. If you outline your intent in a proper plan, you will avoid probate, avoid family fights, and ensure a smooth transition for your family.
A good plan gives you control-even after you’re gone and your assets have been distributed. We call this “Wealth Reception.” It’s the part of your plan that defines who can access the assets you distribute and how those assets may be spent.
Do you want to protect your estate from a surviving spouse’s future companion?
Do you want to ensure the children use the money for education? Do you want to make sure your children have a financial plan in place before spending your money?
Do you want to make sure your legacy is protected from creditors and predators looking to take your hard-earned legacy away from your loved ones?
With a proper plan, you can control all of this.
What Documents Do I Need In My Plan?
A lot of well-meaning people may say a will, a basic trust, or even naming a beneficiary on your life insurance is enough. Not true-this leaves vital gaps that we’ve seen cause too much suffering.
A full plan includes five basic documents.
What is a Durable Power of Attorney for Legal and Financial Matters?
Who will manage your legal and financial affairs if you cannot? This power of attorney includes designating an agent call an “attorney in fact.” You would grant this agent the power to pay your bills, cash your checks, sell your property, access your retirement accounts, and perform other tasks that you may not be able to perform if you are disabled.
If you do not have a Durable Power of Attorney, your family may have to ask a Court to appoint a guardian and conservator to handle your affairs. Several problems with this:
This is a long and costly process which cannot be accomplished in time to handle a crisis event.
The Court may appoint someone you would not have picked yourself.
This can lead to fights that tear families apart.
A Durable Power of Attorney prepares you for a crisis, ensures you are protected, and allows you to control who will make critical decisions on your behalf.
What is a Durable Power of Attorney for Health Care and an Advance Medical Directive?
When you face a medical crisis and you are not able to communicate, you need someone you trustto make treatment decisions on your behalf. Your estate plan must include a Durable Power of Attorney for Health Care to name this individual.
This person would decide what treatment you receive, what doctors you see, which hospital you go to, and-if you allow-whether you are provided artificially supplied food or hydration.
With that, an Advance Medical Directive allows you to direct in advance how you want to be treated. You can outline a clear plan as to what you want done or not done if you are not able to communicate with your health care providers.
What are Beneficiary Designations?
You can name one or more beneficiaries for many of your assets-such as retirement accounts, life insurance policies, and annuities-even for cars and homes.
By clarifying your intent with beneficiary designations, you may avoid probate for the designated assets, or altogether.
Without a proper plan, designations are treated as “gifts” that may trigger tax consequences for your estate and beneficiaries.
Designations alone have no instructions on how beneficiaries may spend your assets and no provisions to protect your assets from falling in to the wrong hands. That’s why you need document 4.
What is a Revocable Living Trust?
The most important and powerful tool in your estate plan: A Revocable Living Trust. A well-designed trust governs who receives your property and how it should be used.
Here’s why you need a trust:
Avoid Probate: All property you own in trust will distribute as outlined in that document, without going through probate. This saves time and money and avoids hassle and heartache.
Privacy: Your trust is a private document, seen only by those you authorize. Your will and probate proceedings are open to the public. By placing property in trust, you protect it from prying eyes and people who have no business knowing about your financial affairs.
Tax Savings: A properly drafted trust can create huge tax savings advantages for your family after you have passed away.
Asset Protection: One of the most powerful advantages with a Revocable Living Trust is Asset Protection. This means you can leave your property to loved ones in a way that protects their inheritance from being taken away in a lawsuit, during a divorce, or if they require government benefits such as Medicaid. This can also protect children from themselves if they are unwise with money, have a substance abuse issue, or for any other reason that you may not want them to have full access to the inheritance to potentially squander away.
Do I Need A Last Will And Testament?
Here’s the dirty little secret about your Last Will and Testament: it only matters if your estate goes to probate court. If you prepare a solid, comprehensive estate plan, you will probably avoid probate.
You still need a Last Will and Testament-just in case. But if the only tool you have in your estate plan is your Will, you haven’t achieved your goal of creating a full “legal blueprint” in a plan that works.
Only Rich People Need An Estate Plan
If you own anything you have an “estate.” If you want to control how your estate settles, you need an estate plan.
Anyone With A Law Degree Can Write A Trust
Because every trust is unique and different, and the laws are constantly changing, it is important to have your trust prepared and reviewed by a qualified estate planning attorney who works in the area of Revocable Living Trusts on a regular basis.
Wills and Estate Plans Are Only For “Old” People
If you have assets, and you wish to decide what happens if you become hospitalized or disabled, and to control how your estate settles, the best time to create or update a plan is before you really need it.
When And How Do I Get Started?
The best time to create a plan-or update your existing plan-is now, before you need the legal protections. We wish for long, happy lives and expect to reach old age. It may not play out that way. The longer we wait, the greater the risk that we won’t be ready.
If you do not yet have a full estate plan, or if it’s been more than two years since you updated your plan, now is the time to work on it.
Next, choose a law office or attorney.
Make sure to choose an attorney who specializes in this law practice. State and Federal laws are often changing and they’re complex.
The right attorney will ask questions and listen to you, and build a plan so your wishes become the legal blueprint for your future.
Choose an attorney willing to educate you and your family about your plan, when to call and change it, and what exact steps to take when you and your loved ones need the estate plan most.
Next, schedule a consultation to meet the attorneys you’ll be working with. They’ll be walking you through the process. This is a great time to ask questions and make sure you feel comfortable.
From there you’ll work together to build a full estate plan that includes the five key documents that protect you while you’re alive, and transfer your wisdom and wealth to loved ones when it’s time.
Raymond Chandler turned his focus to estate planning after having seen his own extended family become involved in nasty fight over property upon the death of a loved one. He witnessed firsthand a family being torn apart simply because of a lack of planning ahead. He has made it his goal to educate families on the importance of estate planning, especially to avoid family fights after a loved one dies.
Scott Stork decided to focus his practice in estate planning after the death of a friend. In fact, Scott spent time the day before his friend died in the hospital trying to help his friend sign his estate planning documents so that his wife and young son were protected. He saw firsthand the dangers of not planning in advance, and the difficulty that the families faced because of it. It became his passion to help people not make the same mistakes. More About Raymond Chandler More About Scott Stork
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