A Beginner’s Guide to Estate Planning

Estate planning allows you to provide for your loved ones after you have passed away and ensure a smooth transition. Although nobody wants to think about their own death,  planning while you are alive can save those you care about from having to navigate future legal complexities after the fact. 

While there are some steps that you can take to begin planning your estate on your own, we recommend that you also enlist the help of an experienced attorney. There are many nuances to trust and estate law, and having a legal expert review your documents can ensure that your loved ones receive their intended inheritances. 

What Happens if I Pass Away without Making an Estate Plan? 

If you do not write a valid estate plan or will, your assets will be distributed to your loved ones based on a policy of “intestate succession.” This means that the state will determine who receives your assets. 

Though all fifty states have their own legal procedures for determining intestate succession, the outcome is not always what one may expect. For example, under Delaware law if an individual is survived by parents or children, the surviving spouse will not inherit everything. In fact, the decedent’s parents or children may inherit up to 50% of the estate!  

To summarize: without proper estate planning  the state will determine who receives your net estate, which may be very different than what you intend.

Furthermore, should you wish that specific family members do not inherit any portion of your estate, writing a will can prevent your assets from being awarded to unwanted parties. Similarly, if you want specific assets to be awarded to particular beneficiaries, your will can ensure that these loved ones receive exactly what you want to give them. 

Planning the Estate

Before meeting with an attorney to review your plans, here are some essential first steps you should take: 

Plan the Logistics

Estate planning requires more than deciding who receives what asset of yours if you pass away. As you begin building your plan, you should ask and answer these important questions: 

  • Who will be the executor of your will? You want to choose someone who you believe will honor your will faithfully and prioritize your loved ones’ best interests. 
  • Will you write a letter of intent? You can draft a letter of intent to provide instructions to your executor. These can range from funeral wishes to inheritance matters. However, unlike a will, a letter of intent is not legally binding. 
  • Will you grant anyone powers of attorney? You can appoint someone to make decisions on your behalf if you are incapable of doing so due to a medical other limiting condition. You can designate multiple people as powers of attorney for different reasons. Is your sibling a realtor? You can appoint them as a power of attorney in all real estate matters regarding your estate. 
  • Who will your beneficiaries be? Usually, most people leave their assets to their next-of-kin, often their spouse or children, but there are no restrictions on whom you can leave your estate to. You can legally leave your estate to any individual or charitable organization you wish to. 
  • Do you have young children? If you do not have a living spouse who can assume custody of your children in your absence, think of whom you would want to take and raise your children if something were to happen to you. 

Take Inventory of All Assets and Valuables

Your estate may comprise a combination of both tangible and intangible assets. Because many of these carry a high value, you want to specify in your will whom you want to receive which asset after your passing. 

Some common examples of tangible assets include: 

  • Real estate 
  • Vehicles
  • High-value collectibles
  • Family heirlooms 
  • Other possessions with high personal value

Unlike the above list, intangible assets are not physical objects that you transfer possession of to someone else. However, many of them have just as much, if not more value, and you still should specify in your will who receives each one. 

Common intangibles include: 

  • Bank accounts
  • Retirement accounts such as a 401(k) or Roth IRA
  • Stock and bond portfolios
  • Life insurance policies
  • Ownership percentage of a business 
  • Cryptocurrencies

Many of these tangible and intangible assets carry immense monetary value. Keeping this in mind, you want to specify in your will which beneficiaries receive respective assets in the event of your passing. 

Unfortunately, many legal battles among family members after the death of a loved one are over these types of assets. By leaving as specific of a will as possible, you can significantly reduce the likelihood of legal tension among those you care about most. 

Appraise High-Value Possessions

As you inventory your tangible assets, you should consider hiring an appraiser to assess their value if you do not know already. For example, if you have expensive jewelry, have recently renovated your home, or own a high-value collectible, an appraiser can provide you a real value that you can attach to these portions of your estate. 

Account for Taxes

At both state and federal levels, some high-value assets may be subject to an estate tax. By planning an estate through valid documents, you may have the opportunity to offset some of this tax burden for your beneficiaries. 

In addition to estate taxes, certain states may also have an inheritance tax. If you live in a state that has estate and/or inheritance taxes, you should contact an attorney with experience in your state to help you plan accordingly. 

Determine Which Beneficiaries Receive Which Assets

After you have inventoried all of your assets, you should create a delegation plan for them. As you go through your inventory, note who you want to inherit each item. If you wish to divide an asset among beneficiaries, be sure to specify the exact percentage of the asset that you want to leave to each individual. 

If you are conflicted over leaving specific assets to beneficiaries, consulting with an estate planning attorney can help you make the best decision possible for your loved ones. Some people prefer to provision inheritances based on needs (i.e., giving more liquid cash to a lower-income relative vs. a higher-income member of their family). However, this is just an example of a method that some choose to implement and is by no means a broad recommendation. 

Do You Want to Give Any Beneficiary an Early Inheritance? 

If you wish to grant some partial or full assets to your beneficiaries while you are still alive, you can establish a living will or trust that will allow your loved ones to access these portions of your estate prior to your passing. 

For example, if you are an adult moving to a senior care facility and wish to give your home to your child, you could include this in a living will. This way, your child can inherit the property while you move elsewhere and the house can remain in the family. 

If you wish to consult with professionals regarding establishing a valid living will, we recommend that you contact an attorney with experience in estate planning and trust law. They will help you create a document that can ensure your loved ones receive the assets you wish them to inherit. 

Contact an Estate Planning Attorney to Help You Today

Estate planning is a vital way to ensure that your loved ones are cared for when you are gone. It is never too late to start preparing for the eventual end of your life, and starting now can grant you the peace of mind that you have taken a necessary step to protect those you care most about. 

If you would like to consult with an attorney on estate planning and trust law, please contact us anytime.