Not sure if an estate plan is right for you or maybe you're not even entirely sure what an estate plan is?
You're not alone. Many people have questions about the process of getting their estate in order for lifetime benefits as well as having an organized plan after you're gone.
Here are seven common questions we hear about estate planning.
1. What is estate planning?
Estate planning is a process for preparing and arranging the distribution of your assets in a manner that ensures your loved ones are provided for in your absence, and that your financial and health care wishes are carried out and honored during a time of mental incapacity and after your death.
2. How much is a “simple will”?
Despite this common belief, there is no such thing as a “simple will.” We are all unique individuals with unique priorities, concerns and goals – not to mention unique families! Most people tend to think about the size of their estate or its value, rather than how to distribute what they have to their loved ones in the most effective way possible. Almost everyone is completely unfamiliar with the default laws that affect the management and distribution of assets even when an estate is modest. Every estate plan is unique to the individual and although some are more complex than others, each should be designed to address a person’s individual goals and circumstances. Without proper planning unanticipated results normally follow and many individuals accidently disinherit their children or have their plan considered invalid under Virginia law.
3. What’s the difference between a will and a trust?
Although both a will and a trust provide instructions on how your assets are to be distributed, a will ensures that everything will first pass through probate while a trust ensures that probate will be avoided. A trust is private, unlike a will which becomes public after your death. With a will, estate assets are generally frozen for a minimum of one year so that creditors may come forward with claims; however, a trust provides uninterrupted trust administration after death so that assets in the trust are immediately available to pay necessary expenses and be distributed to your named beneficiaries. A trust also provides immediate access to your assets if you are incapacitated during life and ensures that bills are paid, businesses continue, and funds are available for your care.
4. Do I really need an estate plan? I do not have a large estate.
Our personal and financial situations vary tremendously and the size of your estate is just one of many important considerations. Other things to consider, outside of the value of your estate, are whether you have minor children; whether you have problem children or family members; whether you have a disabled child/family member; whether this is your second marriage and you or your spouse have children from a prior relationship; whether you don’t have any children; whether your spouse has recently passed away; or whether you have recently separated from or divorced your spouse; whether you have business interests or real estate you wish to protect; or whether one of your children is married to an “Evil Spouse.” These are just some of the considerations that must be addressed in any estate plan.
5. What happens if I do not have an estate plan?
We all have an estate plan – it is the plan that has been determined by the state in which we reside. If you have not established your own estate plan, then the laws of your state determine who will have control and how your assets will be distributed. They will also determine who will be appointed to make your financial and health care decisions if you are incapacitated, and who will care for your children after death.
6. How do I choose a personal representative?
Choosing a personal representative, whether the executor of your will or the trustee of your trust, is extremely important as they will be responsible to carry out your wishes if you are incapacitated and after your death. This is a huge responsibility and can be a very time consuming burden. Some qualities to consider when choosing your personal representative are whether they are loyal/fair, trustworthy, practical, organized, and in most cases, locally situated.
7. What if I change my mind later about my estate plan?
As long as you are mentally competent you can change your estate plan as you desire. We like to say that a well-designed estate plan is “written firmly in pencil” until your death, when it cannot be changed. If you wish to make a change to a trust, we can do an amendment and/or restate the trust in its entirety. With a will, you would normally have a new will prepared that supersedes the old will. We advise our clients to have their estate planning reviewed on a regular basis in order to ensure their objectives and priorities are met, and that the plan coincides with current law.
If you're ready to create an estate plan for your the benefit not just of your assets, but of your family and loved ones, we'd be happy to help you determine the best plan based on your situation. If you have an estate plan that's more than a few years old and would like to review it, we'd be happy to help you determine what, if any, changes should be made. Contact one of our experienced Estate Planning attorneys today.