Estate planning might sound like something that only the wealthy need to worry about. After all, the average person doesn’t really have an “estate”, do they?

In fact, estate planning is an important step in securing your family’s financial future, and should be a priority for everyone, regardless of their tax bracket. Everyone should have an estate plan in place: it helps to ensure that your wishes are carried out when you’re no longer here, it helps to protect your assets, and it can help to provide for your loved ones.

A comprehensive will

A last will and testament is the cornerstone of any estate plan.

It allows you to specify exactly how you want your assets distributed amongst your heirs. It also allows you to designate a guardian for minor children in the event of your death, and even make arrangements for your pets.

Without a will, your estate may be subject to the laws of your state, which may lead to outcomes that you didn’t intend and that aren’t beneficial to your loved ones.

Establish a revocable living trust

A revocable living trust is a flexible estate planning tool that allows you to maintain control of your assets during your lifetime, while avoiding probate upon your death.

Probate is a legal process that happens after someone’s death, and it involves the court overseeing the distribution of their assets, payments of their debts and taxes, and validation of the will. The purpose of probate is to ensure that the deceased person’s debts are settled and that their assets are distributed to the relevant heirs or beneficiaries. However, probate can be a lengthy process, which could even take several years to complete– and it can be expensive, diminishing the value of the deceased person’s estate.

Assets that are held in a trust can pass directly to your beneficiaries without the delays and costs associated with probate court. This approach offers privacy (probate court is a public process), and can streamline the transfer of assets to your family.

Designate beneficiaries & keep them updated

Assets like life insurance policies, retirement accounts, and payable-on-death accounts, allow you to designate beneficiaries.

Keep these beneficiary designations up to date in order to ensure that your assets are distributed according to your wishes.

Plan for incapacity

Estate planning isn’t just about what happens when you pass away– it should also consider what might happen if you become incapacitated.

Establishing a durable power of attorney, and a healthcare proxy, will designate someone you trust to make financial and medical decisions on your behalf if you become unable to do so.

Minimize estate taxes

Estate taxes can significantly reduce the assets passed on to your heirs.

While the federal estate tax exemption is fairly high, state estate taxes may apply at lower thresholds. You may find it beneficial to work with an estate planning attorney to explore all of the possible strategies for lowering estate taxes– like gifting or setting up trusts.

Communicate your wishes

Open and honest communication with your family and loved ones throughout this process is essential. Discuss your estate plan with your loved ones in order to make sure that everyone’s on the same page. This can help to prevent misunderstandings and disputes among your family members after your passing.

Estate planning is not a one-time task– it’s beneficial to everyone if you frequently revisit your estate plans and update them accordingly if your circumstances have changed. An attorney specializing in estate law will help to walk you through the process, keeping you and your family informed and compliant. Reach out to Davidson Law Firm for a consultation today.