Estate Plan Essentials: How to Protect Your Loved Ones
The first thing you should think about doing to start protecting your loved ones AND yourself in the event of your death, or should you become incapacitated – Draft a Will. This is a very important thing to have in place and more than half Americans do not have this.
If you have minor children, you will be able to choose their guardian. If you leave assets to your children, the guardian of your choosing will be in charge of those assets and making sure they are spent and invested appropriately. Or you can create a minor trust within the will, which will hold the assets you leave them until they become of age. Without a will in place stating that, Probate Court will decide who that is (could be the last person you want caring for your children) and how your assets are distributed. A will has to pass through Probate Court, regardless, but with a will, you have the last say in who takes care of your estate and children.
Another thing to consider is a trust. A trust is a legal entity that allows an appointed person to oversee your assets for your beneficiaries. If you have a dependent with a disability, you can create a Special Needs Trust which will allow you to provide for them without compromising any government assistance they are receiving. Trusts bypass Probate Court which will save your estate money and move the process along quicker. People will often use a trust in combination with a will to ensure nothing is left behind to question.
Be sure to update your beneficiaries! A 401(k), insurance policies, retirement accounts and investments trump your will. This is a very common mistake and unfortunately can create a ton of problems for your loved ones. For example, if you listed a wife as a beneficiary, get divorced and re-marry, and you fail to update your beneficiaries, to your current wife, then your ex-wife will have first claim. This can create legal issues, end up being costly and in the end of it all, those who you truly wanted to have these things, still might not get anything. When naming beneficiaries make sure they have the legal power to accept the assets you have left them. So no minor children, because the money will instead go to a legal guardian until the beneficiary is of age. It is also important to consider primary vs. contingent beneficiaries. Primary beneficiaries are first in line to receive assets in the account, contingent are second. Again, making sure to update beneficiaries to reflect any major life events is very important.
There are so many things to consider and think about when you’re planning for the inevitable. It is a process that no one really wants to think about but it is so important to have these matters in place, so your loved ones are taken care of. It can seem a bit overwhelming but contacting an Estate Planning Attorney to assist you with these matters can make the process smooth.
Please feel free to reach out if you have any questions. You can contact the Estate Planning experts at My Estate Plan Michigan at 248-744-4434 or email us at email@example.com.