Estate planning and wills may not be the most exciting conversation topics, but we all need to think about them before the time comes. This goes beyond budgeting your retirement. Estate planning is essential in order to ensure your money and property goes to the right people when you die. There are different ways to approach it, depending on your individual situation. Below, we’ll go through 5 things you should know about estate planning and wills, so you have an easier time putting it all together.
1. They Make Your Relatives’ Lives Easier
If you die with a proper estate plan and will, it should be very easy to ensure your money and belongings are divided up correctly. That’s because you use estate planning and wills to clearly say where you want your money to go when you die.
Without these important documents, it’s down to your relatives to work out where things should go. This usually involves a lot of lawyers and court dates, which are expensive and stressful. Even without animosity in your family, things can get tough when there is a lot of money involved! So, make life easier for those around you by preparing a proper estate plan.
2. Not All Assets Are Treated Equally
There are three main forms of assets to consider when creating an estate plan or will. The first of these is called untitled assets. These come in the form of things like furniture and jewelry. These are assets that usually don’t need any documentation to show to whom they should go when you die.
However, these assets can also fall into the category of probate assets. Other probate assets include real estate or personal property that belongs solely to the person who has died or things like life insurance policies. These are assets you have control over in your will, as to who gets them when you die.
The third type of asset is a non-probate asset. These are assets you don’t have control over in your will. They include property or bank accounts that are held in joint tenancy and retirement accounts. Ensuring that you know the differences between these types of assets can make estate planning and wills much easier to prepare.
3. Trusts Can Be Extremely Useful
Trusts are useful ways to distribute your money with the help of a trustee. These ensure your wealth is properly distributed exactly how you want it to be. Assets you put into a trust are no longer yours, but they will also not be subject to estate taxes.
This makes them attractive for people with very large estates. However, they’re also ideal for those that don’t want their assets to be the subject of conversation in public courts. This is because assets inside a trust are non-probate, in that they don’t need to be divided up in court. However, there can be complex terms associated with trusts, so ensure you talk to a professional before trying to set one up.