Probate and estate planning are two incredibly important aspects of life that most people would rather not think about. They involve making decisions about where your assets will end up after you die and how your family will financially cope without your support.
Since they revolve around death, most people put off considering them until they absolutely have to. It’s common for older people to begin thinking about the process as they see the end of their lives growing near, but it’s just as common for young people to begin estate planning after a big life event or once they have their first child. Regardless of what made you start considering estate planning, you’ve come to the right place. You’ve started a process that will keep your loved ones protected even after you’re gone.
This article will discuss what you need to know about estate planning and the probate process. We’ll tell you how to safeguard your possessions and how they will be distributed to your family after you pass away or become incapacitated. By fully understanding this process, you’ll be able to make decisions that benefit both you and your family. If you have specific questions that aren’t addressed here, or you need an experienced guide to walk you through them, call Waldron Law Offices, Ltd. in Wayzata, MN, today.
Understanding Estate Planning
Estate planning is the process where an individual outlines how they want their assets and responsibilities to be handled after their death or if they become medically incapacitated. It includes making a will, setting up trusts, choosing beneficiaries for life insurance policies and retirement accounts, and making arrangements for taxes and debts.
The goal is to ensure that your wishes are followed, your loved ones are taken care of, and the legal and financial burdens on your estate are minimized. It’s like preparing a detailed plan for someone else to follow. You decide the important things that need to happen, and then you assign someone you trust to carry them out.
The Importance of Creating a Will
A will is the cornerstone of estate planning. It’s a legal document that spells out a person’s wishes about the distribution of their assets and the care of any minor children they might have. It names a person responsible for carrying out the terms and gives them access to your assets. This “executor of the will” can then distribute the assets to your beneficiaries.
Without a will in place, the State of Minnesota will decide how your assets are distributed, which may not align with all of your wishes. Dying without a will in place is known as dying “in intestacy,” and it usually leads to a lot of confusion and frustration for your family members.
In a particularly famous case, “Queen of Soul,” Aretha Franklin died in 2018 with no legal will in place. Her $18,000,000 estate was finally settled in 2023.
Ms. Franklin’s case highlights the importance of estate planning, even if you’re not a famous singer-songwriter. Her four sons had to wait five years to receive the benefits she clearly intended them to have. If your family relies on you for support, a legally binding will is the best way to secure their future.
The Convenience of Setting Up Trusts
Trusts are another important aspect of estate planning because they allow a third party, or trustee, to hold assets on behalf of your beneficiaries. They’re usually used to hold your assets until your children become old enough to take possession of them.
They can also be used to make your specific wishes legally binding. For instance, they’re used by grandparents to ensure their grandchildren have money for college. In this example, the trust might specify that the granddaughter can only receive the assets once she has enrolled in college or even that the money can only be used for college-related expenses.
Trusts can also be used to manage an estate more efficiently. They can avoid the probate process altogether and transfer your assets as soon as you become incapacitated. If your family will need funds immediately after your passing, trusts are a great way to keep them safe.
Avoiding Probate
Probate is the process of legally distributing your assets after you pass. It involves cataloging all of your possessions, paying back any debts you owe, and then giving the assets that are left to the beneficiaries that you choose. It’s a lengthy process, even when everything goes according to plan. Avoiding the probate process can ensure your assets are transferred immediately, and there are a few ways to do it:
- Choose Beneficiaries: Choosing beneficiaries for life insurance policies and retirement accounts is an easy way to ensure that assets are transferred directly upon the owner’s death. This is important because it overrides what’s in a will and offers a straightforward way to pass on assets without going through the usual legal steps after someone dies.
- Add a Second Person to your Bank Accounts: Bank accounts with two owners do not need to be “transferred” if one person dies. The surviving owner simply becomes the sole account holder. This is a particularly easy way to avoid probate because it usually only involves a short meeting with your bank.
- Make Arrangements for Taxes and Debts: Good estate planning also includes ways to reduce taxes and pay off any debts. This might mean putting money aside specifically for estate taxes so assets don’t have to be sold to cover these costs. For debts, it’s about making clear plans for how to pay them off, which helps keep the estate’s value intact for the people who will inherit it.
Call an Experienced Estate Planning Attorney
If you are considering estate planning, there is no better time to start than now. Waldron Law Offices, Ltd. can help you set up a plan that benefits your family and minimizes the financial burdens they will face. Call our Wayzata office today for a free consultation that will explain your options and put your worries to rest.
