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Estate Planning

Not only do you need to think about the burial arrangements, but estate planning considerations and funerals go hand in hand. Managing your estate now will prevent legal dramas in the future.

When you think about the idea of an ‘estate,’ you might look around at your dingy home and think there’s not much to it. Your kids and their kids aren’t going to be wrangling over anything. But when it comes to the end of your life, a mismanaged or unmanaged estate can cause just one more worry for your loved ones. Instead of just letting the lawyers jump into the fray after you die, estate planning needs to be a part of your funeral planning and your funeral insurance plan.

 

Those movies were right…

While you might have laughed at the antics of people who fight over estates in the movies, it’s not nearly as funny for your friends and family when you’re dead and unable to laugh along with them. Sure, the state could come in and help to sort things out too, but they might not do so in a fair way–and that’s when all hell breaks loose.

Your estate isn’t just about your land or your home either–you also need to think about properties you own, who’s going to care for your dependents, and the probate fees for handling this whole mess. The state charges you, after all. They try to squeeze as much money out of you as possible, even when you’re not around to witness it.

The good news is (yes, there is good news) is that it’s quite simple to settle your estate now and prevent legal battles from taking place. All you need is a lawyer to help you write up a will. This piece of paper (well, packet of paper) is going to outline what YOU want to happen to your estate after you die. This means you might give your dishes to your cousin Tim, but the silver to Teresa because she rubs your feet real good. No matter what you want to dictate to happen to your life and your dependents after death, that’s to be covered in your will.

You can also write up a will on your own, but you’ll need to get a kit from the post office or from an office supply store. Then, you’ll need to get it notarized so you can prove it’s signed by you and not by your evil twin. And yes, you can change your will along with your funeral insurance policy if you so choose at any time. Just make a note of the changes, update the signature and the notarization and file it away from your money grubbing cousins.

Death and Taxes

With careful estate planning, you can avoid leaving your loved ones with legal battles and financial stresses. Most estate planning involves a will, assigning the power of attorney and a health care proxy, and possibly a trust.

Proper estate planning first and foremost includes a legal document, known as a will, that ensures that your wishes regarding your assets are carried out after you die. In addition to distributing your property, a will can also declare guardians for your children. Should you die without a will, referred to as inestate, your assets will be distributed among your relatives by the state court regardless of your requests.

The power of attorney entrusts someone with the authority to manage your financial affairs. The person you bestow the power of attorney on is your agent. An agent can be assigned while you are living to manage your finances even if you are not incapacitated. For example, you can give the power of attorney to a spouse so he or she can manage your finances while you are out of town. However, an agent must be given durable power of attorney in order to have any power over your finances when you die or should you become incapacitated.

In addition to a will and bestowing the power of attorney, estate planning also includes declaring a health care proxy. A health care proxy gives someone the authority to make medical decisions on your behalf should you be incapable of doing so.

Trusts are often a more favorable means of distributing estate than wills due to the avoidance of probate and taxes. A trust transfers money, property, and other assets to heirs, who are also known as beneficiaries. Unlike wills, trusts are not handled by the state’s probate court and therefore avoid legal fees which often add up to 2 to 4 percent of the estate’s total value. Delays in court can last up to a year as the will’s executor catalogs a deceased’s property, pays any standing debts and taxes, and proves the validity and legality of a will in court before distributing the assets. Furthermore, all estate handled through probate is subject to high taxes. Because a trust’s assets are considered owned by the trust and not you, a trust bypasses probate proceedings. The person who sets up the trust is known as the grantor, while the person in charge of the trust’s assets is called the trustee. The heir who inherits the trust’s assets after the grantor’s death is known as the beneficiary.

Wills and other estate plans can be updates at any time. Making a basic will generally costs between $300 and $2,000. Creating a basic trust plan, which includes drafting a will, costs between $1,600 and $2,300 for an individual.

According to Benjamin Franklin, “The only thing certain in life are death and taxes.” Although no one likes the thought of their own death, don’t look at estate planning as digging your own grave. In the end, the goal of estate planning is to distribute your property as you wish after you die, avoid your heirs paying unwarranted taxes on inheritance, and make sure that a person you trust manages your affairs if you are alive but incapable of making decisions.