What Is Estate Planning?
Many people do not know whether they have estates or not. But believe it or not, everyone does. The estate consists of everything that you have such as cars, house, checking account, savings account, life insurance, personal possessions, furniture, other real estate properties, etc. however large or little it is; one common element is that you cannot take it with you upon your death.
Thus, it would be best if you planned what will happen to everything you own. The estate plan gives clear guidelines on giving things to the organizations and people you care about. You possibly want to make sure that it is clear who should receive what and when they should receive it. Most importantly, you will wish this to occur with the lowest amount going to taxes, legal charges, and court fees.
In simple words, the estate plan consists of the following:
- Names of the people you care about
- What you want each of them to get
- And when they are eligible to receive the properties.
The estate planning caters to more than the properties involved. That is one of the primary reasons why you should involve the best estate attorneys.
The estate plan can also do the following:
- It can include clear guidelines for your care and financial matters in case you become incapacitated.
- It should also have arrangements for disability income insurance to replace your income if you cannot work as a result of injury, illness, etc. besides, you will still need to pay for your care if you suffer from an extended illness or injury.
- This can also include insurance arrangements to ensure your family will have an income after your death.
- The plan also caters for the transfer of your Business Empire when you retire, become disabled, or even incapacitated, or death.
- It should also appoint a guardian for children’s care and inheritance, and much more.
Importantly, estate planning is a process that needs regular effort and attention. It is not just a one-time task to cater to all the above aspects. It must be reviewed and updated as the family, law and financial situations change over time.
Why Create an Estate Plan?
Do you know that creating an estate plan is crucial? Indeed, it is not just about whether you are filthily wealthy or not. The estate plan aims to make sure that all your assets are transferred to the people you love and the organizations you deem right in a legal way that carries out your personal wishes.
Key Features of a Good Estate Plan
Estate planning is easy if you work with the right lawyers. It can be not easy if you want to do it yourself without the guidance of an expert. It involves the following elements –
When you are creating an estate plan, the first thing that crosses your mind is a will. This legal document gives instructions on who you want to take care of your assets upon your death. They will help to make sure the assets are properly distributed to the right people when the time comes.
The will should also consider minor children. They will need a guardian to take care of them in your absence or in case of incapacitation. Thus, it is an essential element of estate planning that should be done properly to avoid serious issues when you pass away.
Trusts are typically legal arrangements aimed at holding your assets on behalf of the beneficiaries as instructed within the trust document. There are various types of trusts, and you can even dictate how and when the assets should be given to the beneficiaries in the trust.
Revocable trusts can assist your estate in averting probate and the expense associated with probate. On the other hand, irrevocable trusts are ideal in helping you limit exposure to estate taxes. You can also design a trust in your will, which is called a testamentary trust. However, the assets or properties listed in the testamentary are not exempted from probate.
Probate is the legal procedure that occurs when a person passes away. In can include the following:
- Proving in the court of law that the available will is valid.
- It can identify and inventory the property of the deceased.
- It can also help have the property appraised.
- Pay debts and property taxes
- Distribute the assets as instructed in the will or in the state law if the deceased did not leave a will.
Typically, probate involves a lot of court appearances and paperwork by your lawyers. However, the court and lawyers get paid from the estate assets, which would otherwise have been distributed to the beneficiaries. You will need an expert lawyer to help you navigate these processes on your behalf.
Estate administration is simply the way your lifetime financial matters are wound up, and all assets and properties shared when you die. The process of estate administration differs from state to state. Also, estate administration will vary depending on whether the legal documents are in the right order or not. The period can also vary with regard to the value and extent of the property in the deceased person’s estate and on the exact number of people to benefit from the estate.
This estate tax is levied on the property whose value exceeds the exclusion limit that is set by the law. In this type of tax, only the amount exceeding the minimum threshold is subjected to tax. It is usually assessed by the federal government and and some state governments. The levy is calculated with reference to the property’s fair market value (FMV) instead of what the deceased paid for the assets. It is usually levied on the state the owner of the property was living at the time of death.
This is a tax levied on property that is inherited from a deceased person. Unlike estate tax, this type of tax is levied on the current value of the decedent’s property. It is paid by the person who inherited the assets. Presently, there is no inheritance tax levied by the federal government. However, inherited assets are subject to Inheritance Tax on residents of states such as Pennsylvania, New Jersey, Maryland, Kentucky, and Nebraska. Whether you are expected to pay inheritance tax relies on inherited amount and relationship to the deceased. In most cases, very low property values and very close relatives may be exempted from tax.
Estate Planning FAQs
Why is estate planning crucial?
What is involved in planning an estate?
The estate planning process varies for each person. For example, a single man, unmarried, who rents a house and with no children can have a simple estate planning process. On the other hand, someone who has two families as the result of a remarriage will have a more complex estate plan. In either scenario, the process is important for everyone.In simple words, the estate planning process includes an enforceable formal plan with valid documents that means that you have decided on who will receive the assets when you pass away. It is also important because the people you leave behind will not face hard times when making property decisions without your input.
Why must you consider mental Incapacitation in estate planning?
How long does the estate planning take?
We may not have an exact period for the estate planning period. The time taken differs depending on many factors. As stated earlier, a single person who rents a home will not have much to be included in the estate plan. This means that the process can take just a few weeks to complete.On the other hand, someone with a large family and many assets based in different locations will require so much time for everyone to be factored in and all assets captured. Besides, you will need to make the right choice when hiring estate planning attorneys. This is because not all attorneys limit their practice to estate planning and estate administration, and the wrong choice might drag the whole process for months.
How does estate planning look like?
The estate planning process is not complicated as you may have heard or imagined. It is easy and even gets easier when you hire the right attorneys with many years of experience and understand a client’s needs. The estate planning process is quite simple because the process begins when you have hired us.We will deliver a form to you to complete or make it available online. After a week, you can bring the completed form back to our offices. We will go through the document together in our initial meeting. If you have any queries regarding the estate planning process, you can ask the lawyer. Besides, the lawyer can still ask any questions they might be having.
After the meeting, you will receive a draft of the document so that you can review it. All these steps take time. After you have gone through the document and are ensured all the details are correct, everything is signed. In most cases, these steps take 3 – 4 weeks from the starting date.
What factors should you consider when finding an estate planning attorney?
It would be best if you did not work with anyone who just purports to be an estate attorney. Note that you should work with someone who can explain to you what it is and why estate planning is important. The process involves too many personal decisions, and it is good for you as the client to comprehend the ramifications of each action.Hire an attorney who will not rush the process and an attorney who limits their practice to estate planning and estate administration. You can do due diligence on the various steps involved in estate planning. This will help you find out the processes, the time is taken for each, and why each step is crucial.
You will also need to research further on the attorney you want to partner with. They should have the right qualities of an estate planning attorney. You can always request details on how they will handle the process. Consider other factors such as communication, read past client reviews on their website, among other locations.
Experience is yet another important aspect that should be considered. You should partner with attorneys who have served many clients and have a proven track record. Besides, they should have a great reputation. You can still shop around or ask for referrals from your friends and relatives. They can offer valuable connections that will help you find great attorneys.
What are the costs of estate planning?
What happens if you fail to do estate planning?
If you do not create an estate plan, the government has one that caters to your needs. However, this plan may not be ideal for your estate. In most cases, the court will take over and appoint someone to take care of your property or make decisions on your behalf in case you die or are incapacitated. This is not a good idea, and it explains why you should create an estate plan for your family.People turn to the Tarta law firm for estate planning and estate administration services. We serve residents of Midland Park, Ridgewood, Glen Rock, Wyckoff, and Franklin Lakes, HoHoKus, Allendale, Saddle River, Upper Saddle River, Paramus, Wayne, Mahwah, Pines Lake, Ramsey, Woodcliff Lake, New Jersey among other municipalities. in New Jersey. Call us on 201-444-8448 for more on estate or probate matters.