A comprehensive estate plan is not only for wealthy individuals. Estate planning can provide for your own care, protect your assets, and help your family. You can effectively plan what you want to happen to your assets after your death and ensure they benefit who or what you want. Estate plans can allow your assets to stay out of probate court, keeping your assets safe and preventing your family from needing to go through the long and expensive process of waiting for your estate to exit probate.
Basic Components in an Estate Plan
A comprehensive estate plan will likely include the following documents:
- A living will
- A trust
- A durable power of attorney
- A medical power of attorney
- Advanced medical directives
These documents together ensure you are taken care of at the end of your life and that your wishes are carried out after your death. Without a will, your estate will be divided up by the state intestacy laws. Without a trust for your assets, many of them will be diminished and tied up in probate court rather than passing to your beneficiaries quickly. These documents should be reviewed after significant life changes to ensure they carry out your wishes.
Benefits of a Comprehensive Estate Plan
An estate plan has several benefits for any individual and their family. This includes:
Protecting Yourself and Your Interests
A comprehensive estate plan includes instructions for your care if you become incapacitated or unable to make those decisions. This includes:
- A durable power of attorney. This gives someone authority to make financial decisions on your behalf, including paying bills.
- A medical power of attorney. This gives someone power over your healthcare and medical decisions if you are unable to make them.
- Advanced medical directives. This provides instructions for healthcare you do and don’t allow and any other medical choices like where you would like to receive care.
Few people like to consider that they will become incapacitated or incompetent, but it happens to many people as they age. Without this authority, your family members will have to go through the court to make decisions for you. This could take important time during a time-sensitive period.
Saving Your Family Time, Money, and Stress
Without a comprehensive and legally valid estate plan, your estate enters probate and is subject to state and federal taxes before being distributed according to inheritance laws. Your heirs are unable to access the benefits of your estate until probate is complete.
An estate plan can keep your family from dealing with a lengthy probate process. After your death, your family and loved ones should not have to deal with months to years of probate before they can benefit from your estate. They should have time to grieve, not deal with the stress and costs of court.
An estate plan also allows you to name an executor to your will and a trustee to your trust. That way, you can give the authority to transfer your assets to a loved one or professional that you trust.
An estate plan also allows you to make a plan for the care of minor children if you have any. You can determine a guardian for them, which can limit family arguments about who should care for them. This certainty will also be easier on children who are going through an impossibly difficult time.
Protecting Your Estate and Assets
Estate planning keeps your assets out of probate, largely away from creditor claims, and keeps them private. Assets that enter probate become a matter of public records, while assets that are transferred through trusts are private.
Asset protection is one of the main goals of many people who begin estate planning in Bloomington. Trusts are an effective way to protect assets while you’re alive and after your death.
Lessen Arguments Between Family Members
When there is no legally enforceable estate plan, family members are more likely to argue over what your wishes would have been for inheritance. An estate plan does not prohibit these arguments, but it can make them less likely or less likely to be successful.
Q: What Is the Main Purpose of Estate Planning to Help Individuals?
A: Estate planning ensures that your wishes are upheld at the end of your life and after your death. This includes your wishes for your end-of-life care, the distribution of your assets, and who is in control of those assets. An estate plan protects your estate during your life to pass onto your heirs after your death, according to the wishes you leave with an executor or trustee.
Q: What Goals Does an Estate Plan Allow a Person to Accomplish?
A: An estate plan allows a person to:
- Protect assets during their lifetime
- Provide instructions and legal authority for end-of-life medical care
- Provide authority for financial power
- Avoid the lengthy and costly probate process for a majority of the estate
- List the heirs and beneficiaries of different assets in an estate
- List the executor and trustee to distribute those assets
Discussing an estate plan with a qualified attorney can help you determine what your goals are and how to achieve them.
Q: What Are the Six Components of an Estate Plan?
A: The six components of an estate plan are:
- A Will: This appoints an executor to your estate and provides them with instructions for distributing your assets to your heirs.
- A Trust: A trust can keep certain assets out of probate and ensure they are distributed by a trustee to your beneficiaries.
- Beneficiary Designations: In addition to listing the beneficiaries of certain accounts in a will or trust, the individual accounts may need a named beneficiary.
- Medical Power of Attorney: This provides a person authority over healthcare decisions.
- Durable Power of Attorney: This gives someone authority over financial decisions.
- Advanced Medical Directives: These outline what you do and do not allow for healthcare.
Q: Do You Pay Taxes on Inherited Property in Illinois?
A: Illinois does not have an inheritance tax. However, there are federal taxes to take into account, such as estate taxes, which may apply if an estate is significant. Additionally, if a person has property in a state with inheritance taxes, inheritance taxes would apply.
Preparing Your Estate in Bloomington
A Stange Law Firm estate planning attorney can help you determine your goals for estate planning and create a plan that addresses those wishes. Contact our team today.