Many people have questions when it comes to estate planning. The most important of these happens to be the most straight forward: what IS estate planning and is it a must?
Individuals who are considering beginning the estate planning process typically have several questions including:
- What’s the reason for preparing a will or trust?
- Is a living trust necessary?
- What sort of protections can I offer my young children?
- Can my special needs relative be protected?
- We have a blended family. How can we protect all sides of it?
- Is there any way to protect the peace in my family once I am gone?
A trust or will is used to help clear up the chain of distribution of assets upon death. They can also define ones wishes about how guardianship of any minor children should be handled. When one dies without having a proper will in place, it is known as intestacy. When this happens, the individual’s current state at the time of death will then empose an estate plan.
One of the main reasons as to why some people choose living trusts is that it helps to avoid probate. When a person creates their living trust before dying, if the assets have been transferred to the trust, then it is likely that probate may be avoided upon death.
A special needs trust is designed to ensure that a disabled child or other beneficiary can enjoy the use of trust property, which is intended to be held for their benefit. The trustee of the trust provides management of the trust assets, which the beneficiary may be incapable of. The special needs trust is also usually intended to help the beneficiary avoid losing access to needs-based government benefits.
Estate planning is used by those who are typically interested in making sure a contingency plan exists for protecting their children. Such contingency planning must cover both financial and logistic aspects of caring for children. Logistically, a plan will lay out who will be raising the children – guardianship – in the case that neither parent is left available to do so. The financial aspect of the plan will often be used to create a trust for the surviving children once either one or both parents pass away.
When thinking about estate planning issues in blended families, the partners must consider and answer a variety of questions: Should the surviving spouse get access to both spouses’ assets at first death? If yes, should spouse’s access be restricted or unrestricted? When and to whom should the ultimate distribution be made? How should family considerations be matched with estate tax considerations? Which of the children should be taken care of? When should the children receive an inheritance? How should distributions for the benefit of children ultimately be made?
The answers to these questions will help an estate planning attorney make proper drafting choices when putting together the plan.
Estate planning professionals have plenty of ideas for dealing with the possibility of family strife. Creating a written estate plan and keeping it current is the best way to plan to avoid issues after death.