Estate law can be confusing for those without a legal background. There are many common misconceptions about best practices in estate planning and what can be accomplished without an attorney. Consider the following principles of estate planning to start learning a general background about how to effectively plan to transfer your assets upon death.
1. Estate laws vary by state.
While there are some federal tax provisions that apply to estate planning, every state has its own laws about how property of an estate can be transferred. That is why you should work with an estate planning attorney who is knowledgeable about the laws of your particular state.
2. Avoiding probate may save your loved ones time.
Probate is the process by which the state makes a final determination of how certain assets of an estate are transferred. A good reason to structure your estate plan in order to avoid probate is that it can be much quicker to avoid this process. There may also be fewer fees involved.
3. The threshold for the estate tax is higher than you might think.
Currently, the total value of your estate must be higher than $5 million to be subject to an estate tax. It is useful to take an accurate accounting of the value of your estate before finalizing your will because many people go to great lengths to avoid paying an estate tax that they are not actually obligated to pay.
4. About only half of all adult Americans have a will.
Did you know that only about 40 percent of baby boomers have a will. They are the least prepared generation when it comes to estate planning. Many older Americans tend to overestimate the cost of hiring a competent estate planning attorney to draft a simple will.
5. You can also plan for medical care in your will.
You can name a health care proxy in your will who is responsible for enacting the major decisions about the care you will receive. This includes whether you want to leave do not resuscitate instructions for your medical team if you are in an end of life situation.
6. You can name an executor of your estate.
This person will be responsible for filing required forms and making sure that your assets are transferred according to your instructions. It is best to choose someone you can trust and who is familiar with filling out paperwork.
In sum, estate planning does not have to be complicated with the help of a professional. While there are many decisions you must make, they can help your loved ones avoid the stress of probate. The process simply starts by having a will drafted by a lawyer.