Thinking about your own death may not be a pleasant experience, but it’s an important one. You’ve worked too hard accumulating assets and building a legacy to have it distributed to the wrong people or in the wrong manner after you pass away. An estate plan helps ensure that your wishes are met after you’re gone.
A will is the most basic estate planning document, as it guides courts and heirs as to which assets should go to which person. Without a will in place, those decisions are left to the probate court, and the court may make choices that you would not make. An important heir could be left out, or an asset with emotional value could go to the wrong individual.
Even with a will in place, you may also want to think about a trust, which can accomplish a few other objectives. One is that it avoids probate, reducing estate administrative costs and potentially getting your assets to your heirs at a faster rate.
A trust also gives you added control, as you can specify not only who receives which assets but also how they receive them. If you have an heir with special needs or who has trouble managing money, a trust can prevent them from getting their inheritance in one lump sum.
Estate planning can be a complicated process. Even with a will and trust in place, there could be many other issues and decisions that aren’t covered in those documents. Below are three subtle but common estate planning issues to consider. If you haven’t thought about these concerns, now may be the time to do so.
What happens if you’re incapacitated?
Many people assume that estate planning covers your assets only after you pass away. Your estate plan can actually go into effect while you’re still alive. One reason that may be necessary is something called incapacitation. Incapacitation happens when you lack the physical or mental ability to make and communicate decisions. It’s a common outcome for people who have had strokes or who have an advanced cognitive condition like Alzheimer’s.
Fortunately, there are documents to help your loved ones manage your estate. A power of attorney allows you to designate someone as your decision-maker should you become incapacitated. You can also put assets into a living will and designate a friend or family member as the alternate trustee. If you become incapacitated, that trustee would be responsible for managing all the assets in the trust.
There are a number of tools and documents that can be used to manage incapacitation. However, they need to be in place before incapacitation happens. Otherwise, your assets could be managed by the courts or even a family member whom you don’t want to be in charge.
Who is your trustee?
A trust can be a powerful estate planning tool, either during incapacitation or after you die. You can use a trust to manage nearly any type of asset. If you want to control the distributions to your heirs, the trust can manage that process and even manage the assets that haven’t yet been distributed.
The trustee is the person in charge of the trust, and they carry a significant amount of responsibility. They may be able to control distributions, make investment decisions and even control all actions with the trust assets.
Obviously, your trustee should be someone who will act in your heirs’ interests and according to your wishes. Some people make a friend or family member a trustee. However, you may be better served by a third party, such as an attorney or a financial professional. Choosing the trustee isn’t a decision to take lightly.
What happens to your beloved pet?
Your kids and grandchildren aren’t the only loved ones to think about. If you have a dog, cat or other treasured pet, you may want to document what will happen to them if you die or become unable to care for them. Too many pets end up in shelters because their owner didn’t make backup plans.
Your pet is property, so you can assign it via a will or trust. Talk with your loved ones to identify someone to be a backup owner. You also may want to leave them a little bit of money through the will or trust to ensure the pet has adequate care.
It may not seem like a big decision. However, if you’re like most pet owners, your pet is important to you. Don’t let them end up in a shelter because you failed to plan.
For more information on your estate planning needs, contact us at Foote Financial Group. We welcome the opportunity to discuss your challenges and goals and recommend a strategy. Let’s start the conversation soon.
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