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Understand the basics of estate planning and what type of estate is right for you.
Whether we like it or not, aging is inevitable. With aging, unfortunately, comes the task of having to decide what to do with all of your property and belongings. Perhaps you want to pass your home off to your children or maybe you want to ensure that your dear old cat, Fluffy, doesn’t end up in the shelter. Either way, in order to feel comfortable with the direction of your assets, it’s essential that you begin the estate planning journey ahead of the game. Estate planning, however, is not nearly as simple as most might think. The process is surrounded by numerous choices, legal restraints, and taxes. And, if not done correctly, it could result in your belongings going to the wrong hands.
Today on our blog, we’re going to give you a brief introduction to estate planning. We’re well aware of all of the complicated jargon and confusing distinctions between options and want to ease you into some of the terminology and how each option compares to each other.
Well, before we talk about estate planning, it’s probably important that you know what an estate is. An estate, in its simplest form, is everything that you own. From all of your savings, to your home, to your dear cat, Fluffy, your estate encompasses everything in your possession at the present moment. Therefore, estate planning is laying out the groundwork for what you’re giving away, when you want it given away, and to whom you want to give it to.
In estate planning, there are approximately two parties involved: the benefactor and the beneficiary. If you’re the one planning for the estate, then you’re the benefactor. The party on the receiving end is the beneficiary.
Before we start thinking about when to write your will, you should consider if you should write a will. There are two popular methods of passing on your estate. The first, and more well known, is the will writing process. A will, which is written when you’re alive (obviously) basically states the direction of your estate after you die. The will, in turn, needs to go through a legal probate process whereas the court approves (or disapproves) of your documents. If approved, an executor, who carries out the will and makes sure that your estate is put in the right hands, is appointed.
However, a will isn’t the only option you have in designating your estate. The second, more popular option, is through a living trust. In this process, the benefactor gives a beneficiary power over a trust, or property. There are pros and cons to each estate planning option. A living will does not need to undergo the probate process, and can potentially save both parties money in the process. However, there are limitations to what you can do with a trust that you can do with a will. With a living trust, you can’t appoint an executor to fulfill your wishes post-mortem and you can’t appoint guardians to your children or dear old Fluffy with a living trust.
The process of creating a will or a living trust should be done sooner than later. Additionally, you should also consider hiring a financial planner or a probate lawyer to ensure that your will or living trust is planned correctly, to ensure that beneficiaries actually receive their portion of the estate. Luckily, we at Royal Oak Financial Group are especially skilled in estate planning and can help you make the correct decisions when writing a will or a living trust.
Well, while we hope that you and your family are on good terms and that you have a proper plan in place with them, it’s always a good idea to protect your assets and yourself. When financial planning as a senior citizen, it’s good to have an understanding of your rights. We recommend looking into an elder law attorney to ensure that your estate plan is carried out accordingly and that you’re not taken advantage of. Elder law attorneys can also help with Medicaid and Medicare, life insurance, and social security; all of which can go into your estate plan and affect the exchange to your beneficiary.
Thank you for reading today’s blog and we hope that this brief introduction helped clear things up. If you’re considering planning an estate, don’t hesitate to contact Royal Oak Financial Group today for assistance with making important decisions and deciding the right route to take. In the meantime, make sure to read our blog and check out some of the services that our group can provide for estate planning! We’re excited to hear from you and help you with all of your financial needs!