Estate planning documents

Estate Planning: Create Peace of Mind for Your Tomorrow

Have you taken the time to consider the number of items you’ve accumulated over your lifetime? If you have, have you taken the next step and considered who you want your items to go to when you’re gone? Some of those items are sentimental and others might be assets that will carry your legacy. Ensuring your wishes are honored is what estate planning accomplishes.

What is estate planning?

Estate planning is developing and creating specific steps for the management of your wealth and assets. This is carried out both while you’re alive and in the event of your death. An effective estate plan should accomplish your important goals. These goals can include:

  • Ensuring intended heirs receive what you intend;
  • Minimizing unnecessary fees, costs, time delays, and taxes;
  • Allowing control of your estate to remain with who you choose;
  • Eliminating the necessity of a court appointed guardian if you become unable to manage your affairs;
  • Transferring your wealth in a private and personal manner.

Do I need estate planning?

The short answer is yes! Many believe only the rich need estate planning. That’s not true. Your home, a modest investment portfolio, and life insurance proceeds need to be protected. In many states, an estate will be subject to probate. Your estate may also be subject to taxes and other liens. Small or large, your estate should be protected.

What happens if I don’t have an estate plan?

It’s estimated around 70% of Americans don’t have an estate plan. Some believe estate planning is only for the wealthy, and others simply procrastinate until it’s too late. Don’t mislead yourself.

You will have an estate plan when you pass away. The courts will determine who receives your assets and wealth, and who the guardians of your children will be. Your loved ones will bear the burden of unnecessary fees, costs, taxes, and more. The probate system was designed as a mechanism to transfer your wealth and assets to heirs when you pass away or become disabled.

What are problems associated with probate?

Probate was intended to protect your heirs. However, probate can be a heavy burden for your loved ones and an expensive process to go through. Typically, you can expect to pay attorney fees, executory fees, appraisal fees, court fees, and bond premiums.

Depending on the complexity of your estate, probate may take up to 2 years. During this time, your loved ones have virtually no access to your assets. Every detail of your family’s financial status is available for public scrutiny.

There is a psychological impact often unconsidered. Court proceedings are a constant reminder of your passing or that of your loved ones.

Probate will likely occur in every state where assets are located.

Problems with probate can start before you pass away. Your property can be subject to supervision and control of a probate court while you’re alive through conservatorship.

What are my estate planning options?

You can choose to do nothing. A majority of Americans don’t have an estate plan. As a result, your state of residence effectively writes your Will for you and dictates how your property will be distributed.

You can have a Will which documents the transfer of your assets to your heirs. Know that a Will may not protect your family from the stress and expenses associated with probate, taxes, and time delays. Also, different states allow differing interpretations and clauses for wills. When you move from one state to another, revisions may be required.

Utilize joint tenancy when titling property and assets with another person. If one person passes away, the survivor automatically becomes sole owner. Though probate is avoided with the passing of the 1st owner, probate is required on the passing of the final survivor. Under joint tenancy, you may not be able to dispose of your assets without consent of the other owner. This could lead to an expensive and lengthy court intervention of the property in dispute. Additionally, there are capital gains tax concerns.

Utilize a trust that allows you to transfer your assets from yourself as an individual to yourself as the Trustee of the Trust. You manage your wealth and assets for your own benefit as the beneficiary. You maintain control over the assets, can make changes to terms of the trust, and can revoke the trust at any time.

Conclusion

Everyone should conduct some type of estate planning. Estate planning is not only for the rich. There are several documents you should have drafted to properly plan your estate. A properly planned estate will provide protection, probate avoidance, privacy, and peace of mind. Take the steps necessary today so the courts don’t need to.

To learn more about how we can help, schedule a no-obligation consultation. Together, let’s find out if what steps need to be taken during your journey, to and through, a happy retirement with estate planning. Contact us at (443) 906-1565 or mark@sentinelfp.com today!

About Mark

Mark Humphries, CFP® is the owner and financial advisor at Sentinel Financial Planning, a boutique, veteran-owned and operated investment management and financial planning firm. Mark focuses on helping federal government employees, military members, and business owners manage their investments and plan for retirement. As a former military service member and federal employee with over 10 years in the financial industry, he is familiar with the Federal Employee Retirement System (FERS) and the Thrift Savings Plan (TSP) and is uniquely qualified to serve his clientele.