Let’s face facts… No one desires to take into consideration their death. Depending on your age and current financial situation, your end of life plans may be the furthest thing from the mind. But take into consideration this.
If your life were to end today, what would you be forgetting for your family to deal with? Some individuals, unknowingly, leave behind a confusing and expensive mess because of their spouse and children. If you haven’t considered estate planning, here are a few key points to start you off on the right path.
First Things First: Avoid Probate
The first point we should stress is always that you need to avoid your assets tied up inside the probate process. In simplest terms, probate may be the court-supervised process of locating and distributing your assets after your death. This process includes paying one last bill and taxes, then distributing what’s left in your loved ones. Doesn’t sound that bad, right? Keep reading…
Cost – According to research conducted by A.A.R.P., the probate court can eat up anywhere from 6-10% of the total assets. What if your family doesn’t have the finances to obtain your assets beyond probate? More headaches, more stress.
Along with that fact, the economy, like the courts, will be in financial disaster. Talks of raising court filing fees to improve revenue appear over and over. Depending on the state you live in, current probate fees could cost up to $2,500 and may rise even higher inside upcoming years.
No Access to Funds – Probate will leave your family without access immediately to the of your finances. Many individuals falsely assume there is a simple estate and thus need not worry about a prolonged probate process. This can be a common misconception. For most estates, the probate process takes between 6 months to two years. During that time your members of the family could be stuck footing the balance for everything out of your funeral and attorney fees for household bills and property taxes.
Privacy Issues – Probate records aren’t private. All of the assets, liabilities, and data about your beneficiaries are going to be ready to accept people. Some states have even entire probate files on the websites for all to determine. Avoiding probate could keep your household information and finances private.
Everyone Says You Need a Do You?
Ask the general public or financial advisors about estate or end of life planning and what comes immediately to mind? A will. You need a will… You listen to it regularly. It’s the pat answer. But looking more closely, a will is often a nice buffer, in case all you have is a will, your spouse and children are headed befitting for probate. The key to avoiding your assets becoming entangled inside the probate process is always to properly title your assets.
Properly Title Your Assets
Again, let’s talk in the simplest you die, your assets look for a place to go. If your assets are properly titled, it is possible to avoid probate, along with the unnecessary costs that come with reading your will. Depending on what assets you possess, you will find various ways to properly handle each one.
Your Bank Accounts – Bank accounts could be transferred simply and easily with the help of a Transfer on Death (TOD) for an account. Probate avoided. Your Investments, Brokerage Accounts, Stocks, and CDs – Again, a TOD or Payment on Death (POD) will transfer your assets over quickly and without probate.
Your Home – By filing a Beneficiary Deed of Trust or having Joint Tenancy, your home can pass easily to an alternative owner without tax consequences or headache.
IRAs – IRAs must be handled a little differently. Keep in mind, you haven’t paid taxes on your own IRA so to keep them from learning to be a tax nightmare to your children or beneficiaries (or up to 50% in the money being lost in transfer) you will have to examine some IRA Beneficiary Trust Strategies. Contact our offices for even more details on protecting your IRA.
What About a Living Trust?
Everyone’s situation is different. If you have an estate tax situation or if you do have a certain relative that you don’t want your assets to visit, you might like to set up a Living Trust.
With money trust, your property, insurance coverage, retirement accounts along with other assets might be used to fund your trust account. When fully funded, you will no longer own your assets, your trust will. Property of your Living Trust also avoids probate after your death. Instead, it passes immediately on for beneficiaries.
We hope these details have convinced you that end of life estate planning is vital. You’ve worked hard to present an inheritance for the family and kids. The last thing you need would be to have that money eaten up in the court fees and tax penalties.