Many people think estate planning is the province of the wealthy, but there are essential components that should be a part of any estate plan regardless of wealth, age or family situation. Regardless of an individual’s net worth, an estate plan can reduce unnecessary costs, confusion and the anxiety of loved ones after you pass away. While estate planning issues can be difficult for families to discuss, it is essential to maximize the value of your estate and ensure the seamless and efficient transfer of your legacy to loved ones. If you do not have at least a basic estate plan with proper planning, preparation and documentation, the assets that make up your legacy can be lost in limbo and unavailable to family members for years.
Disparate factors like an individual’s net worth, types of assets, family relationships and other relevant considerations mean that estate plans need to be customized to fit an individual’s needs. However, Wichita estate planning lawyer J. Joseph Weber has provided the three essential components that even the most simple estate plan should include:
Legacy Succession Plan (Trust or Will)
While a simple last will and testament is relatively easy and inexpensive to draft, this method of distribution of your assets requires probate. The probate process involves the following steps:
- Authenticating the decedent’s will
- Conducting an inventory and appraisal of the assets in the state
- Satisfying obligations against the estate like debts and taxes
- Distribution of the remaining assets in the estate according to the terms of the will
The probate process involves a fair amount of technical paperwork and multiple court appearances which can result in avoidable legal fees, court fees and probate fees which will diminish the value of the legacy that can be distributed to your loved ones.
- While setting up a trust typically involves more upfront costs, trusts offer advantages that are not available with a will. These benefits can include the following:
- Trusts can prevent the need for a guardianship or conservatorship if you become incapacitated.
- Wills only provide benefits after you die whereas a living trust can begin providing benefits as soon as the trust is created and funded.
- Trusts can provide financial protection during periods of incapacity.
Probate can be avoided if you rely on a trust rather than a will which can delay distribution of assets to your loved ones and reduce the value of your estate.
Durable Power of Attorney
If you become incapacitated, a durable power of attorney designates an agent (often referred to as an “attorney in fact”) to act in your place in handling legal and financial issues. A power of attorney can simply authorize the agent to sign a single contract or handle your affairs during a vacation or empower an agent to step into your shoes and exercise virtually plenary ability over your financial and legal affairs. The document also can provide a level of authority that falls anywhere in between these extremes. If the power of attorney is “durable,” it will continue in full force and effect even if you become incapacitated. The commencement of the effective period of a power for attorney can be upon execution, a specified date or determination of incapacity.
There are certain types of assets that are not transferred to your loved ones by a trust or will. Assets like 401(k) accounts, life insurance policies, pensions, payable on death accounts and other types of property with a beneficiary designation must be reviewed. These assets will pass to the designated beneficiary, so these accounts and assets must be periodically updated to ensure they remain current based on changes in your circumstances.
If you have questions about estate planning, we welcome the opportunity to talk to you and answer your questions. We invite you to call the Weber Law Office at (316) 265-7802 or to submit an inquiry form through this website to schedule your initial consultation with an experienced Wichita estate planning attorney.