Banking & Finance and Law

Do you know where your personal assets will go when you're gone?

November 11, 2014
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If you don’t know, chances are someone else will make that decision for you.

Planning for events that will take place after your death may seem futile, since you won’t be here. But when you work tirelessly over the course of your life creating wealth for you and your family, it only makes sense that you choose who gets to enjoy the fruits of your labor. Proper estate planning ensures that your loved ones receive your money in the amount you intend, and the timing you choose it to happen. It also involves setting up a plan for issues of disability, guardianship, retirement, taxes and Medicaid.

The estate planning process can include creating a trust, will, financial and medical power of attorney, as well as properly deeding your real estate and filling out beneficiary forms. It is important to note that since each person has a unique situation, no one estate plan is the same.

Trust agreement

A trust is a legal agreement allowing you, the grantor, to transfer your assets to another person, the trustee, with instructions on how to manage the funds for a third person, the beneficiary. It is used to establish exactly where you want your money to go, such as charitable organizations, children, or other beneficiaries, and the timing of distributions. Once a trust is created, it must be properly funded. This is done by way of deed, beneficiary forms and assignment forms. All real estate interests, business interests, checking and savings accounts, and life insurance policies should be titled in the name of the trust or have a specific, named beneficiary. If assets are not titled in the name of the trust, most likely they will go through probate. Probate is a lengthy court process in which state law is applied to govern who receives the rest of your assets. Probate is public record — meaning that families lose the element of privacy — and it is very costly. It is important to see an estate planning attorney or tax advisor to determine how to best avoid probate.

Will

Your assets that are titled in the name of the trust are protected from the very expensive and very public probate process. A will specifies how you wish the rest of your assets and possessions to be disbursed — especially if you forgot to title some of your assets in the name of your trust. A will is also a great place to appoint a guardian to take care of your children.

Durable power of attorney for financial management

You may wish to execute a financial power of attorney for convenience, or to be prepared for potential future disability. The financial power of attorney gives another person the authority to act on your behalf and manage your financial assets. If you are out-of-state on business, for example, and need to attend a real estate closing, you can simply have your agent take your place. This document is extremely helpful as you grow older and leaving your house becomes more difficult.

Durable power of attorney for health care

Do you have specific health care wishes? To avoid confusion and family turmoil, consider having a medical power of attorney drafted. With this, your agent is given the authority to make decisions on your behalf — some of which may be in life or death circumstances.

It is wise to consult a legal or tax advisor to help create your plan based on your personal circumstance. It is important to evaluate your estate plan every few years to make sure that the plan that you have set up still meets your goals and if the “right” people will be privileged to enjoy your wealth. By being proactive now, you’ll save money and have the satisfaction of knowing you are in control of your assets, both now and after you’re gone!

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