Creating your personal estate plan may feel overwhelming. You will need to select who your belongings will go to, which is a challenge in and of itself since you must consider the feelings of others. The nature of estate planning can even cause you to forget key things that you should be doing. Be sure to ask these 3 questions to make sure you're covered.
What Are Your Current Debts?
Many people do not realize that their debts are what causes families to go to probate court to settle an estate. A prime example is allocating a high value item that you own to an individual in your will, but it is later discovered that the item must be sold to cover existing debts. This is often the case with homes or vehicles, which could result in the sale of the property to cover debts, even if a partial value of the asset is needed.
Make sure you recognize all of your debts and ensure money or assets have been allocated to pay for them. While you may be aware of credit card debt or a mortgage, some debts may actually come after you pass away. These debts include:
- Funeral costs
- Medical bills
- Outstanding taxes
- Legal fees for probate
If you do not account for these debts, you could have a problem where your estate is not divided as you intended.
What Beneficiaries Are Listed on Your Accounts?
Chances are that you have savings accounts, retirement accounts or life insurance policies where you need to list a beneficiary. A common mistake made is assuming that you just need to list one person and that they will split up the money among everyone else.
For example, you may decide to leave your retirement account entirely to your wife, but wish to give a little money to your kids upon your death. Unless you specifically list everyone as a beneficiary on your accounts with the money specifically allocated, there is no guarantee that they will receive it.
In addition, leaving family members and friends to do the right thing when it comes to dividing inheritance could cause drama in the family. Some people may feel they are entitled to more money than they were willing given by an inheritor, and which can cause a fight between loved ones.
If you specifically give your beneficiaries what you feel they deserve, accounts will be divided according to your wishes no matter what others say. One thing to keep in mind is that your listed beneficiaries on an account will override anything you list in a will.
What Assets Do You Jointly Own?
Jointly owned assets can be a very challenging thing to deal with after someone dies. Any jointly owned property with a spouse will be easy to figure out, since chances are that you'll want the property to go to the other person. This includes your house, car or land that you own.
Unfortunately, other items are much harder to divide when jointly owned. For example, a small business that is owned by two people will have another owner to contend with. While the other owner may feel like they deserve to inherit the other half of the company, you may have your own thoughts on who you want to leave it for. Disputes like these will be settled in probate.
Be sure you get documentation for jointly owned assets that states how all owners agree for the asset to be divided after someone's death. This will help avoid any disputes later on.
Need help navigating your estate plan? Know that he Law Office of Leon A. Karjola can help.