Estate planning is one of the most important steps to protect yourself and your loved ones. Proper estate planning puts you in charge of your finances and can help your loved ones minimize the expense, delay, and frustration associated with managing your affairs when you pass away, become incapacitated, or become disabled. With proper planning, your assets can be passed on to your loved ones without undergoing probate in a quick, inexpensive, and private manner.
There are many simple to complex ways to handle your estate planning. What you want and need will determine the level of planning you may require and the options you may want to review.
A will is a legal document drawn up and signed under state law. A will is a part of your "estate plan." Upon passing away, the will becomes irrevocable, or in other words, final. In your will, you are able to name:
Beneficiaries. Family, friends, domestic partners, or charitable organizations that receive the goods you indicate. You can assign specific gifts to beneficiaries, such as jewelry or a particular amount of money. You should also indicate the residue of your estate and its remaining assets (do not forget to specify them) that are not explicitly awarded to people or organizations in your will.
Guardians for your minor children. You can name in your will a person who will be responsible for caring for your child(ren) if you and your spouse die before the child reaches 18 years of age. You can also name a guardian - who may or may not be the same person - to manage the assets inherited by a minor child(ren) until he/she is 18 years old.
Executor. The person or institution you choose and appointed by the probate court will collect and manage your assets and pay your debts, expenses, and taxes. Then, after approval by the court, the executor will distribute your assets to your beneficiaries according to the provisions of their will. Your executor will play an important role with significant responsibilities. You should carefully choose an executor.
A Transfer on Death Instrument (TODI) is a revocable instrument allowing a property owner to transfer their home (or any owned real estate) to one or more persons or beneficiaries upon the owner's death. Importantly, this method of transferring the property helps AVOID probate for the home. A TODI acts like a deed to the property, except the TODI only comes into effect once the property owner passes away. At the time of the owner's passing, the property under a TODI will automatically transfer to the named beneficiary or beneficiaries.
A Living Trust is a fiduciary arrangement that allows the creator to transfer their assets to be held and managed by a third-party legal entity. This party is known as a Trustee, and the person appointed to this role will ensure that your estate is handled as outlined in the trust. Trusts can be customized to specify exactly how and when your assets can pass to the beneficiaries. Since trusts avoid probate, your beneficiaries may gain access to these assets more quickly than they might to assets transferred using a will.