If you own a home, are planning to buy one or have other investments, it’s important to protect your assets in the event something happens to you. Estate planning designates more than who will get your stuff after you die; it also allows you to choose guardians for your children and provides instructions in case you’re incapacitated for any reason. You can’t predict the future; however, you can provide guidance for your loved ones to help them know and understand your final wishes.
How Complicated Is Your Situation?
DIY estate planning, such as LegalZoom or Quicken Willmaker Plus, can work well for folks with simple estate situations who don’t require trust or tax planning.
However, those with significant and more-complicated assets, complex family situations or other out-of-the-ordinary circumstances likely need more sophisticated advice than online sites provide. In these cases always consult with an attorney who specializes in estate planning to make sure you have the correct estate planning documents for your situation. Do not rely on the DIY method to create your own trust document.
A Basic Will
A will outlines all of your property and financial assets, and may also designate who will receive those belongings, who will care for your dependent children (if you have them) and other important long-term decisions. Since you won’t be around to ensure that your wishes are carried out, you’ll appoint an executor, a person you trust, to do so. A will may also outline instructions for transferring your business, if you have one, at retirement, disability or death.
While 95% of Americans want to choose who receives their property and assets when they pass away, only 45% of people have a will or estate plan in place.
Although many people don’t draw up a will until they’re older, you shouldn’t wait. If there’s no will in place when you die, (intestate) that state will determine how your assets are distributed.
The Downside Of Not Having A Will
Forty-one percent of baby boomers (aged 55-64) don’t have a will. Don’t think you need one? Here’s what happens if you don’t…
- The state becomes your partner and has a stake in how to divide up your money and property.
- You lose control over who takes care of your minor children should something happen to you and your spouse.
- Your assets could be tied up in court for years as the court sorts through your property.
Also known as a health care directive or an advance directive, a living will allows you, while you’re healthy and able, to outlive your wishes regarding life support, organ donation and overall end-of-life medical care.
You can also designate a durable power of attorney to carry out your health care decisions, should you ever be incapacitated or otherwise unable to make those decisions yourself. This shouldn’t be confused with a traditional will, which becomes enforceable after death.
Livings trusts are similar to a will in that you can express your last wishes, designate someone to carry them out and name a guardian for your dependent children. A trust, however, gives you the flexibility to transfer your assets while you’re still alive, meaning they’ll pass to your beneficiaries upon your death without having to go through the potentially expensive and time-consuming probate process. Trusts allow you to be more specific about what will happen to your assets once you’ve passed. For example, you can designate when your children will receive money or what should be done with your property.
What’s more is your successor trust, the person you’ve chosen to carry out your instructions, may also be able to manage your health care, legal and financial affairs if you become incapacitated. Setting up a living trust is often more expensive than the other options because you’ll continue to manage it after it’s created; however, it’s more comprehensive and flexible.
Benefits Of A Living Trust
- Your assets will be distributed to your heirs faster – Unlike wills, living trusts avoid lengthy court proceedings. In Colorado, the average estate spends 9-24 months in probate.
- Your estate may save money at the time of your death since you’ll avoid expensive court fees.
- Living trusts are private. Since they’re not public record, all of the information therein is kept private upon your death.
What About Your Digital Assets?
More than 63% of American’s don’t know what will happen to their digital assets when they die. This includes more than the passwords to your favotie online shopping sites; it also encompasses your music library, online photo albums, email, social media or any files and photos you have stored in a cloud-storage program.
Help your executor or other designated individual manage your digital footprint by storing the credentials for your accounts with an encrypted electronic vault app, life Master LockVault and Google Vault. Remember to include instructions for your appointee to access the electronic vault when the time comes.
*Disclaimer: Citywide Home Loans does not provide financial planning services or any other service apart from lending. You should always consult with your legal, tax and financial advisors to determine which strategy is the most suitable for your specific circumstances.