In the process of building assets throughout our whole lives, we often forget who we’re doing it for. Our close and loved ones, who depend on us, are left to struggle with legal challenges upon our demise for what should naturally and legally be theirs. The responsibility to give them at least legal relief in the grieving time falls on you.
More often than not, estate planning is perceived as an after-retirement activity. Which, on one hand, is ignorant, and on the other—inconsiderate. In this article, we’ll discuss what estate planning is, why you need it, and if you need to involve legal in the process.
What Is Estate Planning
Estate planning is the practice of involving your financial planners and lawyers to review your assets, family structure, and goals to determine their distribution following your demise. Depending on your estate, a variety of professionals may be involved in the process including your broker, life insurance advisor, and banker.
The objective of the whole planning process is to prepare a legal will that is to be held as your last wish in a civil court during the probate process. Although a few inheritance laws are in place to restrict the use of wills, with estate planning, you can fulfill your goals without bypassing them. The restrictions often include the interests of the dependents like your spouse, minor children, and such.
If you die without leaving a will, the statewide inheritance laws will determine who’ll be the executor and the distribution of the estates. Which may not be divided as you intended.
What Is Probate
Probate is a mandatory legal process (with a few exceptions) reviewing and facilitating the estate transfer process from a deceased person to the beneficiaries according to their will or according to the inheritance laws if there are no wills.
The proceeding includes verification of the wills for existence, authenticity, and validity. If your estate is of high value, probate is usually a mandatory process. The executor may also need to clear all the debts and tax returns if there are any, to facilitate the probate process. However, they may use your assets to repay the creditors.
Why Do You Need Estate Planning
Dying without a legal will in place is called intestate. If you die intestate, it can leave various legal complications for your family. One of which is, dispute. It can tear apart your family fighting over your estate. Although inheritance laws are in place to prevent just that, those can be challenged and won—leaving the deserving beneficiaries with underwhelming outcomes.
For example, if you have a partnership business that is operated by two members including yourself, as per non-probate law, failing to leave a will might result in your partner acquiring the whole business following your demise. Estate planning lawyers in Fresno can help you prevent such unfortunate incidents.
The courts will decide who’ll get your assets without estate planning and a legal will. Your second home, stock portfolio, and liabilities will be distributed among your spouse and offspring according to the inheritance plan. But, as the court doesn’t know who among your family members is the responsible one and can handle the responsibilities, they often award the wrong individual with the estate.
If you have young children, you also can name their guardians following your demise. In this complex world, relying on the court to decide on their legal guardians could be unreliable and unsatisfactory.
You also can spare your loved ones from paying inheritance, federal, and estate taxes with estate planning. With an eye toward reducing the tax burden for the beneficiaries, you can help them settle down faster and more efficiently after your demise.
But, all these reasons don’t account for why estate planning requires legal action. Let’s get into that.
Why Estate Planning Requires Legal Action
Involving legal professionals in estate planning can save your close ones a lot of complexities.
To Prepare the Will
Although online DIY services are available for individuals to prepare their own will, it’s better to not use these services if you have substantial assets. Even if you don’t have high-value assets, consider employing a lawyer to prepare your will so that the farm can support your family legally after your death.
To Divide Your Assets as per the Law
As mentioned, inheritance laws protect your close ones from getting waived out of the will. If you wish to disregard a family member, you will need a lawyer to frame the will in such a manner that satisfies your requirements. Furthermore, even if you want to reasonably distribute the assets, an undeserving beneficiary may challenge the will to prolong the process to months or even years. Your family members will need legal support to mitigate that.
To Execute the Will
Following your demise, it’s only reasonable to assume that your loved ones will be in grief. But, the probate process requires an executor to facilitate the applications and handle the proceedings. In this grieving time, it’s better to leave probate in the hands of professionals. By involving legal professionals in your estate planning, you can ensure that the beneficiaries are legally and psychologically protected.
To Understand Non-Probate Properties
A few properties and estates can be handed over to your intended beneficiaries without needing to go through the probate process. A few examples of non-probate properties are
- Jointly held assets. Upon your demise, the partner(s) will automatically be handed over the assets without the need for probate.
- Revocable living trust estates. During your lifetime, if you place your assets in a revocable living trust, the beneficiaries will automatically get them without probate.
- Assets with designated beneficiaries or nominees. Life insurance, 401(K), and IRAs are included in this.
- Most saving bank accounts with designated nominees.
However, keep in mind that non-probate assets are taxable.
The Bottom Line
Wills are a major part of estate planning. To prepare the will, It’s critical to involve legal professionals in the process to understand what you can do to protect your loved ones, reduce their tax burden, and effectively execute it.