Estate planning can involve a variety of different tasks, including planning for medical emergencies and long-term care later in life. However, for many people, the goal is to create a meaningful legacy.
Many people wish to pass property to specific beneficiaries. Their beneficiaries can include friends, family members, romantic partners and even charitable causes. How do testators establish estate plans that ensure as much of the property held by the estate as possible transfers to their beneficiaries?
Creating and updating testamentary documents
If an individual does not have a valid will on record, then state law determines who inherits from their estate. Intestate succession rules are very broad and prioritize immediate family members.
People who create wills and other testamentary instruments can choose who inherits from their estate and allocate specific assets for each beneficiary. They may also need to regularly update their documents as their pool of beneficiaries or property changes.
Addressing financial obligations
Debts, taxes and probate costs can all diminish what passes to beneficiaries. Testators can plan to avoid losses by carrying enough life insurance to pay their debts, such as student loans.
They can also prioritize communicating with their beneficiaries about their estate plans. Doing so reduces the risk of litigation, which can consume a significant amount of the assets in the estate by generating court costs.
Keeping assets out of probate court
Testators often need to plan carefully to keep their property out of probate court whenever possible. Doing so reduces the likelihood of estate taxes. Assets that don’t pass through probate court also have protection from creditor claims or Medicaid estate recovery claims.
People can keep property out of probate court through multiple strategies. They can add beneficiaries as co-owners to the assets while they are still alive. They can use the assets to fund a trust. They can add transfer-on-death or payable-on-death designations to financial accounts. By arranging for the direct transfer of property and keeping it out of probate court, they can optimize how much of their resources go to their loved ones.
Working with someone familiar with probate rules and estate planning techniques can help people maximize how much of their property passes to their beneficiaries when they die. A thorough estate plan can go a long way toward limiting liabilities and ensuring that the right people receive appropriate resources from an estate. The right tactics can give people control over their legacies and help them maximize what passes to their chosen beneficiaries.