Many people die without a plan for the legacy, and it’s easy to chalk it up to sheer negligence. But the situation isn’t as clear-cut as it seems. There’s a common belief that only the super-rich need to plan their estate, and this misconception affects everyone. Let’s start with what estate planning is. It’s basically a set of instructions that tells people what to do with your assets when you die.
Even if you’re not worth millions of dollars, it’s important to have a plan for your assets. That’s why you need to find a lawyer experienced in drawing up wills. That way, you can indicate the beneficiaries of your estate. Otherwise, the process defaults to state laws, and your family will have no say over the outcome.
The most important document in legacy planning is the last will. It’s the one most people are familiar with, and plans fail or succeed based on this document’s strength. Of course, there are other aspects of legacy planning that we need to consider as well. There are many types of plans, depending on what you want to happen.
Planning your legacy ensures a better future for your family. Without a plan in place, we risk losing much of your assets to taxes. An estate plan also allows you to have a voice even if you are incapacitated. A designated beneficiary can make important decisions to ensure that life goes on. Here are a few things you need to remember when planning your legacy.
1. Plan ahead
It always pays to plan, especially when it comes to your legacy. Nobody wants to be caught off guard by an unforeseen event. But what if that event puts a wrench in your legacy planning. For instance, your beneficiaries could die before you.
If you want to secure your beneficiaries’ future, you also might want to establish a specific trust for important expenses such as education and healthcare. You can start a college fund for your children or grandchildren. It’s also important to think carefully about your trustee, as they will have to make difficult decisions once you become incapacitated.
2. Be specific
The last will becomes more effective if you leave specific notes and directions for your assets. For instance, if you want to leave the family home to your favorite niece, then you need to specify that in your will.
Make sure to mention all your real properties by name to avoid disposition by probate. You must have clear plans for your real estate since court cases can be expensive and contentious. You also want to avoid a situation where your family is barred from entering their home.
No asset is too small when it comes to the will. You can even bequeath specific items to certain individuals if you want to. Instructions also go beyond disposition. Some have also attached instructions to satisfy a certain condition. Let’s say you own a historically significant building. You can specify that future developers need to maintain the facade’s architecture.
3. Consider your options
There are other ways to protect your assets, even while you’re alive. For instance, you can transfer your assets to a living trust. This reduces your tax liability and makes things easier for your heirs upon your death. Living trusts are more complicated than your average last will, and you will need to work with an experienced estate lawyer.
The top reason why many people get a living trust is to avoid the probate process. Even estate plans with a valid will have to undergo the probate process, and you have no control over who will control the asset distribution. In some cases, probate can be messy and expensive. Meanwhile, a living trust ensures that your beneficiaries get what they need without going through the courts.
Another reason why you should consider a living trust is to save money. It might cost more to draw one up than conventional plans, due in part to the legal workload, but you minimize costs once your assets are distributed. You can lose as much as 5 percent if you go through the regular process.
A final word
Everyone deserves a proper legacy plan. Even if you don’t own many assets, you want to make sure that your estate passes to your heirs intact. That way, your family will remain comfortable and protected, even if you’re no longer around.