Estate Planning Fundamentals

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Many people assume that estate planning is only for the rich or elderly. But even if you’re young and healthy, making an estate plan is smart. Accidents and illnesses can happen when you least expect them, and if you die without an estate plan, you could leave a complicated mess for your family to untangle after you pass away.
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Passing Away Without A Will

For instance, if you pass away without a will, the law says you’ve died intestate. That means you have no control over who inherits your assets. Under those circumstances, your spouse and children will inherit your assets first by default, followed by other relatives. If you intend to leave money to friends or charities, it may never reach them unless you make your wishes known in a will.

Have a Plan In Place

Do you have minor children? It’s painful to think about, but who will take care of them if you pass away? If you don’t name a guardian in your will, the court may assign a guardian you don’t like.

Bypassing Probate

Estate planning also allows your family to bypass probate. Probate can be a long, stressful, and expensive process, so you’d probably like to spare your loved ones from it if you can. With a trust, your family can settle your estate much faster. We’ll talk more about the documents every good estate plan needs below.

Wills and Trusts

What’s the difference between wills and trusts? Do you need both? Maybe, but it depends. You can use both documents to control the distribution of your assets after you’re gone, but they’re not quite the same thing.
Estate planning fundamentals
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Last Will and Testament

Your estate plan should include a will at the minimum. In your will, you can leave money, property, and other assets to loved ones after you die.

You’re not limited to leaving assets to people, though. If you like, you can give your assets to a business or charity that’s important to you.

If you have minor children, your will is the place to name their guardian should you pass away before they turn 18. Before you name someone as guardian, though, talk with them to ensure they’re up for the responsibility.

If you leave assets to minor children, you’ll need to name someone to manage those assets until your children turn 18.

Lastly, you’ll name a personal representative to carry out your wishes after you pass away.

To finalize your will, you’ll have to sign it in front of two witnesses (beneficiaries of your will can’t serve as witnesses).

Revocable Living Trust

At first glance, a revocable living trust seems similar to a will. You can use both documents to control who inherits your assets after you die.

But, unlike with a will, you can’t name a guardian for your children in a trust. So if you have children, you’ll still need to make a will.

Another difference between these documents is that a trust allows your family to bypass probate, while a will does not. If you’d like to spare your loved ones from the time and expense of probate, it’s smart to make a trust.

When you make your trust, you’ll have to name a trustee. This person handles asset distribution according to your beneficiary designations. They’ll have other duties, too, including:

  • Closing credit card, phone, and other accounts after your death
  • Notifying beneficiaries of your passing
  • Paying your taxes and bills with trust property
  • Notifying retirement accounts and life insurance policies that provide death benefits to the grantor

The role of trustee comes with a lot of responsibility, so think carefully before you choose to assign that role. Pick someone you trust who knows how to handle money and deadlines responsibly.

Revocable vs. Irrevocable Trust

Before making a trust, you must understand its terms. Don’t confuse revocable living trusts with irrevocable trusts.

A revocable trust allows you to change the terms anytime before you die. You retain control over your assets while alive.

If you opt for an irrevocable trust, you can’t change its terms once you’ve set it up. The trust also owns any assets you put in it.

An irrevocable trust sounds restrictive, but it does have its uses. Some people set up an irrevocable trust to reduce taxes or protect assets from debt collectors. If you’re unsure which trust to choose, an estate planning lawyer from Legacy Design Strategies can help.

Powers of Attorney

A power of attorney (POA) legal document gives another person the right to make certain choices for you if you become incapacitated. You can give someone full decision-making power or limit their control to specific areas.

A financial POA allows someone to make decisions about your money. This person can file taxes, pay bills, sell property, and manage your retirement plans.

With a medical POA, you can name a person to make healthcare-related choices for you. They can talk to your doctors and choose treatments on your behalf.

You may also want to create an advance care directive. This document spells out your wishes for medical treatment if you can’t speak for yourself. For instance, you could specify whether you want doctors to revive you or continue life support.

It’s a good idea to have an advance care directive even if you’ve named someone to serve as medical power of attorney. This document alleviates the burden of making tough decisions for your loved ones.

You’ll need to meet two requirements to make a power of attorney. First, you must be of sound mind (able to make good decisions). Second, you must sign the document before a notary public.

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Contact Legacy Design Strategies for Your Estate Planning Needs

If you’re ready to make your estate plan, Legacy Design Strategies is here to help. We specialize in estate planning and have years of experience serving clients in Iowa, North Dakota, and Nebraska. If you’d like to make a will or need help choosing a trust, just give us a call.

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Office Locations

Omaha, NE Office

9859 South 168th Avenue,
Omaha, NE 68136

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Minot, ND Office

7 Third Street SE, Suite 202,
Minot, ND 58701

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Iowa Falls, IA Office

320 North Oak Street, PO Box 295,
Iowa Falls, IA 50126

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Some Of The Areas We Serve

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Omaha, NE Office

9859 South 168th Avenue,
Omaha, NE 68136

Minot, ND Office

7 Third Street SE, Suite 202,
Minot, ND 58701

Iowa Falls, IA Office

320 North Oak Street, PO Box 295,
Iowa Falls, IA 50126

IMS - Estate Planning and Elder Law Practice Growth Advisors
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