Whether you are young and in perfect health or aging with health concerns, estate planning is necessary. An estate plan allows you to decide who will manage your estate after you die or if you become incapacitated. Through an estate plan, you not only name the person responsible for making sure your wishes are honored, but an effective estate plan also details your preferences for everything from healthcare to finances and property distribution.
Estate planning can be complex and involves a lot of difficult decisions, so it is important to recruit an appropriate team of professionals to help you navigate the best options for your circumstances. An estate planning attorney and financial advisor or accountant are vital members of your estate planning team.
How important is an estate plan? What components do you need? We address these and other frequently asked estate planning questions in the paragraphs that follow.
Do I need a will? What happens if I die without one?
Yes! If you care how your property is distributed, who will care for your minor children when you are unable to do so yourself, or if you just want to make sure your loved ones have the financial means to get by after you are gone, you need a will. A will allows you to transfer assets to beneficiaries, select guardians for minor children, and choose an executor to manage your estate upon your death.
If you do not have a will, your assets will pass through the state-sanctioned intestacy scheme. This means state law will determine how your estate is distributed. Unfortunately, this means everything from your personal property to your children goes to whomever the state law determines is appropriate regardless of what you may desire.
What are the benefits of proper estate planning?
Having an estate plan does more than just offer peace of mind that your assets will be distributed per your wishes. The taxes associated with settling an estate can be costly. An effective estate plan can reduce or eliminate estate taxes. Additionally, your estate plan can be used to protect your property now, upon your death, and long after you are gone in the event of post-mortem litigation against your estate or divorce.
A clear estate plan provides the guidance your loved ones need when you become incapacitated or die. Difficult decisions about life-sustaining measures or arguments about who should get a beloved family heirloom only add stress to an already emotional time. Proper estate planning removes the burden of settling your estate from your family.
What are the elements of an effective estate plan?
Every estate plan looks different and varies in complexity based on the needs and assets of the individual. However, while there are many components of an effective estate plan, four main elements are found in all effective estate plans: the will, living will or advance directive, a power of attorney, and a trust.
- Your will protects your estate from the complications of probate or intestate distributions.
- A living will or advance directive is also necessary because it allows you to make decisions about your medical care in the event you become incapacitated, terminally ill, or otherwise unable to communicate your desires. Your feelings about being placed on life support or receiving other life-sustaining medical interventions will not matter if you do not have an advance directive. Medical providers will make these decisions for you or your family will face the difficult burden of deciding what to do.
- A power of attorney allows you to name the individual responsible for making decisions when you are unable to do so for yourself.
- A trust protects the specific distribution of your assets, such as ensuring your child receives the benefits of your assets regularly throughout their life, all at once upon a certain life event like marriage, or other stipulations. Whether or not you need a trust depends on the size of your estate and/or the necessity for oversight in ensuring your heirs properly manage your assets upon your death such as minor children or elderly parents in need of long-term care. However, everyone needs a living will or advance directive and a power of attorney, regardless of the size of your estate or family situation.
How often do I need to update my will?
Generally, you should review your will and all components of your estate plan at least every three years to five years. However, any significant life event should also trigger a review of your estate plan. This includes events like marriage, divorce, a new child, or even a change in jobs or income. Failure to review and update your estate plan timely can lead to problems when intended heirs being unavailable, or due to other administrative flaws.
When is the best time to plan my estate?
Now. There is no such thing as creating an estate plan too early, but if you are waiting for some life event to do so, like a specific birth date or terminal diagnosis, that event could come after it is too late. You must be of sound mind to create a valid estate plan.
How can an estate planning attorney help me?
The laws regarding estate planning are intricate and complicated, full of technicalities and nuances that make drafting an effective estate plan tricky. Can you write your own will and it be valid? Sure. However, a simple typographical error or missing signature could not only nullify the document’s validity, it could change the entire meaning of your document to directly contradict your intentions.
An experienced attorney is not only skilled at applying the law to make sure your documents hold up in court should someone decide to challenge them, but can also make suggestions to address matters you might not otherwise think to plan for.
At Wilson Ratledge, we assist our clients in setting up estate plans that give them the peace of mind in knowing that their assets and loved ones will be adequately protected. Contact one of our experienced North Carolina estate planning attorneys today at 919-787-7711 or via our contact form below.