Estate planning helps you disperse your assets to your children and loved ones. Even when you have a last will and testament, mistakes on the documents—or a lack of information—can prevent your assets from going where you want them to go.
The biggest problem encountered when passing your estate and assets to your beneficiaries is not having a plan. Good intentions will not get the job done. You need to take inventory of all your assets and decide where you want them to go. Once you have that information, contact an estate-planning attorney for consultation and to understand what methods would best accomplish your goals.
Consider the Needs of Your Beneficiaries
Creating your estate-planning documents when your children are small means their needs and desires will change as they age. Your plans may include releasing some money at certain stages of their life, but these stages can change. They may never get married, go to college, buy a house, or start a business. They may also not be responsible enough to handle large amounts of money. Because of life changes, you need to update your estate plan every three to five years to ensure that it best meets their needs after you are gone.Talk to Your Beneficiaries
As you make your plans, talk to your beneficiaries and tell them what you intend to do with your assets when you die. Warren Buffett, one of the richest men in the world, recently said that he would never sign a will until his children have read it and made suggestions. He says it is how he plans to avoid challenges to his will.Name More Than One Beneficiary
Although you want some of your assets to go to a specific person, there is always the possibility that they could die before you do. If that should happen, TrustandWill says you should name a contingent beneficiary to cover this potential problem.Besides naming all your beneficiaries and keeping your will and trust information up to date, you also want to include all your assets, including those that are exempt from probate. Investopedia says that retirement plans, life insurance, and annuities are exempt. Accounts designated as a transfer on death or payable on death are also exempt from probate.
Power of Attorney Documents
Since the future is so uncertain, you need someone appointed to make health care and financial decisions for you if you cannot do so. It is best to have two people named on these documents—one for your health care and the other for financial decisions. Both choices need to be people you trust. You should also name a secondary person on each document.Make your health care intentions known to the individual that may one day decide what health care treatments you want—or do not want. In both situations, you do not want to choose someone who is a beneficiary.
Include a Digital Assets Plan
A lot of assets these days can be held in digital form. They can include credit card accounts, social media accounts, passwords, private keys to digital wallets, cryptocurrency, and more. If the access information is lost, it could cause a lot of trouble accessing it later on. It should not be listed in a will, however, which will be available to the public when it goes through probate.When you pass, all the information needed to access your accounts should be easily accessible to your heirs. Instead of storing the information on a computer without Internet access—which could accidentally be thrown away—you could put it in a hardware wallet. Information on how to use it must also be available.
Gift-Giving to Offset an Imbalance
Instead of waiting until you die to pass on your assets, you can give them to your beneficiaries while you are still alive. It will let you have the joy of seeing their reaction when you give them your gifts.You can give gifts of up to $17,000 per person in 2023 to as many people as you want. You can also repeat the gifts to the same people in the following years. Giving gifts reduces your taxes (when made to charitable organizations), and the recipients also pay no taxes on them. Since they are your assets, you can give them to whoever you want. LegalZoom mentions that it will also help to avoid any claims of undue pressure, which could provide grounds for a challenge to your will.
The No-Contest Clause
If you suspect your will might be contested in court, there is a way to prevent it from happening. A no-contest clause may be all you need. The clause states that if the will is contested and the person loses the case, then they are excluded from receiving anything in the will.The clause can be valuable if you leave unequal amounts of assets to your beneficiaries. The one with the smaller amount may sue for an equal amount or more. Nolo says that not all states enforce it, such as Florida and Indiana. About half of the states will enforce it.
One reason you may want to leave unequal amounts to your children is that you may be aware that one of them cannot control their spending. It leads you to think that they would quickly spend away their inheritance. If your state does not support the no-contest clause, there are other ways to limit how much money the beneficiary can draw at one time—such as by a spendthrift trust.
Other Estate-Planning Essentials
As you get older, remember that you may need to have considerable assets available for long-term care. It can be very costly. AnnuityExpertAdvice says the average cost of nursing home care is more than $9,034 per month. If you or your spouse should need it, it can take a lot of resources to cover it, so be sure to keep some funds for medical costs (and funeral costs).Inheritance planning that will accomplish all you want requires the services of an asset-protection attorney. Avoid common mistakes by using a professional familiar with the current estate-planning laws.
The Epoch Times Copyright © 2023 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
