What is Estate Planning?
Planning your estate is about caring for your loved ones, seeing they are provided for, and making sure your hard-earned property is distributed according to your wishes.
Your estate consists of all your property, including:
- your home and other real estate
- tangible personal property such as cars and furniture, and
- intangible property like insurance, bank accounts, stocks, and pension and social security benefits.
What are the advantages to Estate Planning?
By taking the time and effort necessary to plan your estate, you will be able to:
1. Provide for your immediate family
Couples want to provide enough money for the surviving spouse. Couples with children want to assure their education and upbringing according to their wishes. If you have children under 18, both you and your spouse should have a will nominating personal guardians for the children, in case you both should die before they grow up. Otherwise, a court will decide without your input where your kids will live and who will make important decisions about their money, education, and way of life.
2. Get your property to beneficiaries quickly
Options include insurance paid directly to beneficiaries, joint tenancy, and living trusts, as well as using simplified or expedited probate and taking advantage of laws that provide partial payments to beneficiaries while a will is in probate.
3. Plan for incapacity
During estate planning, you can also plan for possible mental or physical incapacity. Living wills and durable health-care powers of attorney enable you to decide in advance about life support and to choose someone to make decisions for you about medical treatment.
4. Minimize expenses
Good estate planning can keep the cost of transferring property to beneficiaries as low as possible, leaving more money for your beneficiaries.
5. Choose executors/trustees for your estate
Choosing competent executors/trustees and giving them the necessary authority to act, will save money, reduce the burden on your survivors, and simplify administration of your estate.
6. Ease the strain on your family
You can take a burden from your grieving survivors and plan your funeral arrangements when planning your estate. Or you may want to simply limit the expense of your burial or designate its place.
7. Help a favorite cause
Your estate plan can help support religious, educational, and other charitable causes, either during your lifetime or upon your death, and at the same time take advantage of tax laws designed to encourage private philanthropy.
8. Reduce taxes on your estate
Every dollar your estate has to pay in estate or inheritance taxes is a dollar that your beneficiaries will not get. A good estate plan can give the maximum allowed by law to your beneficiaries and the minimum to the government.
9. Provide for people who need help and guidance
Do you have an elderly parent or disabled child, or a grandchild whose education you want to assure? You could establish a special trust fund for family members who need support that you will not be there to provide.
10. Make sure your business continues smoothly
If you have a small business, you can provide for an orderly succession and continuation of its affairs by spelling out what will happen to your interest in the business.
I’m not old or wealthy, do I need an Estate Plan?
Yes! Too many young or middle-aged people die suddenly, often leaving behind minor children who need care and direction. Estate planning should be part of your overall financial plan, along with your children’s college tuition and your retirement needs. If your circumstances change, it is easy and inexpensive to adjust your plan.
What happens if I don’t have an Estate Plan?
If you die without a will or trust, you’ve in effect you have left it to state law to write your will for you. That means the state will make certain assumptions about where you would like your money to go—assumptions with which you might not agree. Some of your hard-earned money might end up with people who do not need it. Meanwhile, others who might need the money more, or who are more deserving, could be shortchanged. And surviving relatives may squabble over who gets particular items of your property, since you did not make these decisions before you died.
What type of information do I need to have a plan together?
- the names, addresses, and birth dates of all people, whether or not related to you, who you plan to name in your will;
- the name, address, and telephone number of the person(s) you expect to name as the executor of your will;
- if you have minor children, the names, addresses, and telephone numbers of all possible guardians;
- the amount and source of your principal income or other income such as interest and dividends;
- the amount, source, and beneficiaries of your retirement benefits, including IRAs, pensions, Keogh accounts, government benefits, and profit-sharing plans;
- the amount, source, and beneficiaries of other financial assets such as bank accounts, annuities, and loans due you;
- the amount of your debts, including mortgages, installment loans, and business debts, if any;
- a list with approximate values of property you own, including real estate, jewelry, furniture, collections, heirlooms, and other assets;
- a list and description of jointly-owned property and the names of co-owners;
- any documents that might affect your estate plan, including prenuptial agreements, marriage certificates, divorce decrees, recent tax returns, existing wills and trust documents, and property deeds;
- the location of any safe deposit boxes and an inventory of the contents of each one.
My spouse doesn’t like to think about death. What should I do?
It’s only natural that we tend to be a bit squeamish when it comes to death, especially when thinking about our own or that of someone we love. You cannot plan your estate, however, if you do not know all the facts about your family’s assets. Set aside a specific time for gathering information on your spouse’s income and insurance benefits, what debts are owed, and where assets are invested. Ask about which beneficiaries have been named in your spouse’s insurance policies, pension plans, retirement accounts, and similar assets. You also need to know who holds title to real estate, cars, boats, and recreational vehicles.
Why should I go through the trouble of writing a will?
A will lets you control what happens to your property. If you have minor children, a will enables you to designate who will care for them after your death. Through a will you can nominate a legal guardian for your children and name an executor to handle the distribution of your estate to your designated beneficiaries.
What happens if I die without a will?
If you die without a valid will, your estate is known as an “intestate estate.” In that case, the Kentucky laws of distribution would govern the distribution of your assets. The courts would also choose a guardian for your minor children and determine the executor of your estate. The court’s choices may or may not be your choices. Under Kentucky law, if you die without a will, any property that passes through probate will be distributed according to Kentucky law. The results could leave your spouse and/or children with few resources available to provide for their support and day-to-day living expenses.
Without some thought, planning, and the proper legal documents, your estate could end up paying more money than necessary in taxes to the state and federal governments.
Can I leave my property to anyone I wish?
In general, you can choose the people you want your property to go to and in whatever proportions you want, but there are some exceptions. For example, a surviving husband or wife may have the right to a fixed share of the estate regardless of the will.
Can I disinherit my spouse and children?
You usually cannot disinherit your spouse, but in every state except Louisiana, you may disinherit your children. Your intent to disinherit must be stated in writing.
Can a will be changed?
Yes. It is a good idea to review your will from time to time and make changes as necessary. Some events during your lifetime may invalidate your will and make it necessary to make changes in it. These events include:
• Marriage, remarriage, or divorce.
• Birth of a child.
• Move to another state.
• Acquisition of additional assets.
• Changes in federal and state laws.
Some people choose to make amendments to the original will instead of rewriting the entire will.
Start now by calling or emailing us to schedule a FREE initial consultation to discuss your circumstances. We look forward to helping you move through these life challenges. We are experienced in planning for the future and dealing with that future plan after you pass.
If you have any questions or comments, do not hesitate to contact us.
We handle Estate Planning in all of Kentucky–especially Jefferson, Oldham, Bullitt, Hardin, Breckinridge, Larue, Marion, Meade, Nelson, Spencer, and Washington Counties, including the cities of Louisville, Prospect, LaGrange, Taylorsville, Brandenburg, Radcliff, Elizabethtown, Shively, Pleasure Ridge Park, Valley Station, Fairdale, Shepherdsville, Ft. Knox, Bardstown, Mt. Washington, and Hardinsburg.
Contact O’Bryan & O’Bryan to find out more about our Estate Planning practice and how we can serve you.