Want to protect your family and cut down on stress and some difficult consequences your heirs may face? Get started on estate planning.
Estate planning is likely to bring the best results, if it is done early and kept up to date, according to Guidon in “In the Works: Don’t Wait: Considerations in Estate Planning.”
The two most common ways to transfer wealth and property are through a will and beneficiary designations. The use of a will requires probate, which is the process of having the court review the will and “prove” it is the last statement made by the deceased. It can be expensive and time-consuming. Therefore, many people work with their estate planning attorneys to maximize the assets that have beneficiary and contingent beneficiary designations.
The beneficiary designations can include people, organizations, charities or trusts, or a mix of all of them.
Most of our wealth in this country is transferred through a will. However, it can only transfer property subject to probate. Some examples are real estate, also known as real property, personal property and accounts with no beneficiary designation or surviving joint owner. Accounts that are typically transferred by beneficiary designation, include life insurance policies, annuities, pensions, IRAs and 401(k)s.
Keeping beneficiary designations up to date with changes in your life is very important. Births, deaths, divorces and marriages are all trigger events that require a look at your estate plan and your beneficiary designations.
Here’s something to keep in mind: beneficiaries are not notified when changes in their status are made. If you take someone who was a beneficiary off an insurance policy, they are not going to get a phone call or an email from the insurance company. People are often worried about the repercussions of changing beneficiary designations or even their wills. Unless you tell people there has been a change, they will not know until you pass.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances. It may also benefit from the new tax laws.
Reference: Guidon (July 19, 2018) “In the Works: Don’t Wait: Considerations in Estate Planning”