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60% of Americans don’t do any estate planning or even have a will. One of the most common reasons why is there are a lot of misconceptions about estates and wills.
Read our estate planning for dummies guide and understand everything about estate planning and wills.
Estate Planning for Dummies: What Is It?
In short, estate planning is arranging a person’s estate during their life and after their death.
The point of this is to minimize legal disputes, ensure your estate lands in the correct hands, and estate planning can even avoid and decrease taxes.
While having an estate and/or will makes the probate process easier, it doesn’t completely avoid probate court. But it can reduce the burden your family and loved ones have over your estate.
Each estate plan depends on the individual. Some are simple, assigning all possessions to one or a couple of family members. Others are more complex.
This depends on certain situations; for example, if you assign all possessions to your children but they’re under the age of 18.
Most beneficiaries are family members or close friends. If you don’t assign specific beneficiaries, the state and the court can decide what happens to your possessions.
Your possessions aren’t the only aspect of your estate plan. You should also include instructions after you die and when you’re still alive.
For example, if you get Alzheimer’s Disease, assign an individual who will be responsible for your care.
If you’re on life support, your estate can detail if you should be kept on life support or if you want to “pull the plug” and end the life support (including who administers this action and how long you’ll be kept on life support).
What to Include in Your Estate Plan
While each estate plan will differ, there are certain factors your estate plan should always have. These include:
- Instructions for your care (before and after death)
- Instructions for your valuables
- Instructions for family member care (such as children) or anyone else with special needs
- Name your executor (or the person who handles your estate)
- State any savings, retirement accounts, and life insurance that you have and who has access to those funds after your death
- State any rights a former spouse or stepparent has
- Establish anything that will minimize court costs, taxes, and legal fees
- Transfer your business (if applicable)
In addition, you shouldn’t only draft one version of your estate plan. You should continue revising it and change it regularly.
Does Everyone Need an Estate Plan?
The short answer to this question is, yes, everyone needs to have an estate plan. That’s because everyone has an estate.
But does everyone need an estate plan now?
While the ideal answer is yes, it’s understandable why many don’t have a concrete estate plan. They may think they’re too young, they haven’t acquired much wealth, and they don’t own enough.
While everyone should have a basic estate plan, some people require a more detailed estate plan at a certain time in life. Some good examples are:
- You have a large estate
- You live in a certain state (some states are easier on probate than others)
- You have children
- You have a specific plan for your money (for example, you want your money to go to charity)
- There’s specific information you don’t want to be disclosed to anyone but the executor and the courts
- The life stage you’re in (such as when you’re retired or if you’re sick)
- You own a business
- You have a complex family structure (examples include a blended or combined family)
- You have children or other family members and loved ones with special needs
While everyone needs a will, these circumstances involve will and estate planning more urgently.
Why Don’t So Many People Have an Estate Plan?
There are common reasons why so many people don’t have an estate plan. These reasons include:
- They don’t think they’re old enough
- They don’t think they own enough
- They don’t know how to create an estate plan
- They think they have plenty of time
- They don’t want to create one
- They don’t think they have any beneficiaries
What happens is, when something does happen to them, their families are burdened with legal fees and taxes. Even if you don’t have a lot, putting your estate plan in writing will provide proof for your loved ones and your estate.
Do You Need a Lawyer?
If you’re in the beginning estate planning phases, you’re probably debating about hiring a lawyer. While there are many DIY services for estate planning, there are some situations when a lawyer will be useful. These include:
- You live in a state with harsh probate laws
- You own a business
- You had multiple marriages
- You have a family member with special needs and/or a disability
- You own lots of real estate
- You have children (specifically, minor children)
- You own a substantial sum in a retirement account
- You want to leave lots or all of your money to charity
- You’re recently divorced or widowed
Ideally, everyone should plan their estate with the help of a lawyer. But why do some people need a lawyer and others don’t? A lawyer ensures your estate is legally valid.
Some situations aren’t as legally necessary as others. Good examples include stating a plan for your furniture versus stating a plan for your business.
Are you not sure if a lawyer will benefit you in the estate planning process? Many lawyers and law firms, such as Filmore Spencer, offer a free consultation for this purpose.
If There’s a Will, There’s a Way: Create an Estate Plan for Less Stress
Everyone has an estate. This is why everyone should have an estate. Hopefully, our estate planning for dummies guide inspired you to create an estate plan.
Want to learn more life advice? We offer plenty of advice for all readers. Continue reading our website!