Estate Planning 101: All You Need to Know About Estate Planning

estate planning 101

No matter how old you are, it’s never to early to start some estate planning.  Some simple measures can make a world of difference for you and your family, even if that eventuality is way in the future.

You also do not have to be a multimillionaire to take advantage of the laws surrounding trusts and estates. Some careful planning with the assistance of a qualified attorney can help you make preparations now while you are creating your legacy.

Here is a broad overview of Estate Planning 101 to help you get started. These questions will help guide you as you begin to plan for the future.

1. Where Do You Live? 

When you begin to plan your estate, you first need to consider where you live.

If you live in Wisconsin, you will not have a state estate or inheritance tax. However, if you own property in a state that does have this kind of tax, like New Jersey or Pennsylvania, that state may levy taxes on your beneficiary or your estate.

If you are very wealthy now or in the future, your estate may be subject to federal taxes.

However, there are other financial benefits to estate planning, even if you do not expect a large tax bill. If you place certain accounts in trust for your children, they may derive tax advantages while the money grows over time.

2. What Do You Have? 

Owning property, a business, life insurance, or other items of value means you should plan for their distribution after your death. 

The more money you have, the more you need an estate plan. However, even people who consider themselves middle class can benefit from having a will and even trusts to determine who gets what. 

If you have a large family, you may want to specify who gets how much of your estate. You may wish to include only those who will need it. You may wish your money to go to your children, but to be managed by another family member until they are aged 25 or 30.

Passing your assets to beneficiaries through a trust can also be more expedient than going through probate. Probate can be a long and contentious process. If you plan your estate carefully, the people you leave behind will have access to your property and money through a trust more quickly.

3. Who Do You Take Care Of?

If you have small children, you should have a will and estate plan. No one in their twenties or thirties likes to think they may die one day, but unfortunately, terrible things do happen. You want to take care of your family, just in case the worst happens.

In addition to making financial arrangements for your children, you may also want to designate who will take care of them. Some wills will name a guardian for minor children if both parents die.

You may also name someone to administer the estate, (control the money) after you pass away. They might be given the responsibility of deciding on what the money in the estate can be spent for the benefit of the children. For example, they might be able to approve college tuition but not the purchase of a motorcycle.

If you have someone with disabilities in your family who is unable to work for a living, you may want to make special provisions. There are trusts that can be set up for the benefit of disabled people which provide special protection. These special needs trusts may be funded by an inheritance from you.

These trusts aim to ensure that your family member is taken care of throughout their life.

5. Who Do You Trust to Take Care of Your Affairs? 

When you plan your estate, you must choose someone to pay your debts, distribute your assets, and make sure that all of your wishes are followed. This will be your Personal Representative. 

You can give your Personal Representative a wide range of power, including the ability to file taxes on trusts, distribute monies to beneficiaries, and even arrange your funeral.

Your Personal Representative can be your spouse, a trusted child or friend, or a lawyer or accountant. You should also name alternative Personal Representatives in case they predecease you.

You can also assign someone the responsibility to make end-of-life medical decisions on your behalf.

6. What Does Your Family Structure Look Like? 

Did you remarry late in life? You may want to make specific provisions to leave your estate to the children of your first marriage.

Do your children fight over money frequently? Is there a member of your family who is unworthy of inheriting from you? 

Are your family members well off, or do you want to teach them the true value of hard work? You may wish to give a portion or all of your estate to a charitable organization.

Estate planning will solidify your wishes to reduce infighting in your family and make sure your assets go to whom you want them to go. 

7. How Do You Want to Enjoy Your Retirement? 

Estate planning specialists and lawyers can help you get the full value of your money before you die.

Estate planning should start well before you retire.

Estate Planning 101: Not As Hard as You May Think! 

Estate planning 101 does not have to be difficult or morose. In fact, it is a great feeling to understand you can make the most of your income and provide for yourself and your family in the future. 

By exploring your options and setting up your affairs now, you will reap the rewards for a long time to come.

For more information on planning your estate, contact us

Guide to Creating an Estate Plan in Wisconsin

family walking on beach after estate planning in wisconsinMost Wisconsin residents associate estate planning with drafting a will—and nothing more. In reality, there is more to the process, such as drafting directives that guide family and friends during difficult times. As a whole, an estate plan is a package of legal documents that lead to an optimal financial outcome and expedient process for all parties involved and detail the wishes of the incapacitated or deceased.

Because everyone’s situation varies, the exact estate planning documents and arrangements needed are different for every household (and sometimes for individual household members). The details of an estate plan can also vary from state to state. In general, however, the initial steps for creating an estate plan are similar, including where to start the estate planning process.

Gather information about assets and liabilities.

Estate planning is not entirely about financial matters; however, finances are an integral part of every estate plan. To give professionals a comprehensive view of the financial situation, compile a list of assets and liabilities. This information should include financial accounts, life insurance policies, any financial debts, and other liabilities that needs to be factored into the estate. This information can also be used to calculate the net worth of the estate; this step needs to be done to determine if and what taxes the estate is subject to.

Have important discussions.

Beyond the owner of the estate, there are other parties that are named in estate planning documents. These parties need to be chosen, including:

  • Beneficiary or beneficiaries. These parties receive assets from the estate. Beneficiaries, commonly called heirs, can be individuals (i.e. family members, friends, associates) or organizations (i.e. charities).
  • Executor. This party should be a responsible individual that ensures all the terms of the estate planning documents are executed. An executor can be a friend, family member, or associate, such as a lawyer or other firm.
  • Guardian. This party is named as the caregiver for minors when the owner of the estate is incapacitated or deceased. (Read more about choosing and naming a guardian for children.)

A discussion with these parties is not required for estate planning; however, discussions can be invaluable with all parties involved (including friends or family members that are not named in the estate plan) so the execution of the estate plan is seamless and efficient. When executors, beneficiaries, and guardians are named, information about the parties should be collected (contact an estate planning lawyer to find out what information is needed). If the choice of beneficiaries, executors, or guardian changes, these parties can (and should) be changed and updated.

Contact an experienced local estate planning lawyer.

There are several different estate planning options, such as a will, advanced directives, irrevocable and revocable living trust. An experienced, local estate planning lawyer can recommend the best documentation and arrangements suited to the specific situation. Bring all information to the meeting, including the list of assets and liabilities and information about parties that should be included.

The materials on this website are provided for informational purposes only and do not constitute legal advice. These materials are intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future results. Transmission of the information is not intended to create, and the receipt does not constitute, an attorney-client relationship between sender and receiver. You should not act or rely on any information contained in this website without first seeking the advice of an attorney.

 

8 Questions to Ask Before Drafting a Will

will document that brings up estate planning questions wiDrafting a will is an important estate planning step, and one that does require some preparation. We’ve assisted many Wisconsin clients drafting a will; while hiring an experienced estate planning lawyer ensures that the document is legally sound, asking a few of the right questions at home can assure that the will is accurate and complete.

Who do I want to appoint as guardian of my children? What is that person’s personal information?

Selecting a guardian for your children and other minors when you pass away is not a decision to be made lightly. The right guardian should be an adult, incredibly trustworthy, and should fit all the criteria of a capable guardian. Once you have chosen the right party to be guardian, have their full name and personal information with you when you visit your attorney.

Who are the beneficiaries that I want to receive my assets? What is their personal information (i.e. social security numbers, address, etc.)?

A beneficiary is a party (i.e. individual, charity, etc.) that should receive the assets listed in a will. A will can include instructions to divide the assets equally between beneficiaries or provide specific instructions on individual assets. When scheduling an appointment for drafting a will, have an idea of any specific instructions before visiting an attorney.

Are there any assets that I want to pass on to a certain individual, such as an heirloom piece of jewelry?

One of the most common estate planning mistakes we see is people who give verbal instructions to a beneficiary without including any written instructions in a will. Depending on the situation, this can lead to hard feelings and improper execution of verbal instructions. Unfortunately, verbal instructions are not legally binding, meaning that there is no legal way to ensure that they are followed. Instead of simply telling a beneficiary they can have a prized item, include a written instruction in a will; it’s the best way to ensure that all wishes are followed.

What assets should be listed in the will? Do I have information about those assets (i.e. bank account numbers, lock box information, etc.)?

Not all assets need to be listed in a will. For those assets that should be included in the will, compile pertinent information about the asset, such as the holder and number of a life insurance policy. All information needs to be given to a lawyer during the will drafting process.

Who do I trust to carry out the instructions in my will?

One of the key parties listed in a will is an executor. The executor is charged with the task of distributing assets and carrying out wishes listed in the will. An executor should be extremely honest and organized. The executor does not need to be a family member; it can be anyone you trust with the responsibility. Choose the executor carefully and discuss the decision with all relevant parties to make the process easier when the will goes into effect.