Thinking about the world and how our loved ones will fare after we pass away can be very difficult. Although we all know that we will pass away at some point, this is not something most people like to dwell on. However, by proactively planning and prioritizing your goals, you can craft an estate plan that allows your wish to provide the best future for your loved ones to become a reality. The first step in creating an estate plan is to consider your priorities. Your goals and wishes will be unique to your circumstances, the needs of your loved ones, and your desires to support your favorite charities.
Getting clear on your priorities is important to the estate planning process because we need to work together with your other advisors to ensure that you have enough money and property at your death to carry out your wishes. This coordinated effort will also help ensure that your wishes do not contradict each other or create any significant issues.
Some Common Priorities You May Consider
Avoiding Probate: Important Estate Planning Priorities
Many people want their loved ones to avoid the probate process because it can be expensive, time-consuming, and public. It can also be difficult for a loved one to manage while they are grieving. However, some people appreciate having a neutral third party (the judge) oversee the winding down of their affairs in the event there may is a conflict.
Do Your Estate Planning Priorities Include Avoiding Conservatorship or Guardianship?
Estate planning is not just about what happens when you die. There may come a time when you are alive but unable to manage your own affairs (this is commonly referred to as being incapacitated). If you have not legally appointed someone to manage your finances or make medical decisions for you, your loved ones may be forced to appear before a judge and petition to have someone appointed to take on these roles. This process can also be expensive and time-consuming and is public as well. However, if there has been a lot of familial flighting, a neutral third party may offer the consistency and oversight needed.
Providing and Protecting an Inheritance
Depending on their age and needs, children and grandchildren may not be best served by receiving an inheritance outright. You can instead create a plan so that the inheritances you leave to your beneficiaries are held over time, with distributions being made at certain ages, stages in life, or at the discretion of a trusted person you designate to be in charge. There are many ways to structure these types of inheritances, and you should know the pros and cons of each.
Protecting Your Surviving Spouse’s Inheritance
Providing for a surviving spouse may be at the top of your list of priorities. However, it is important to consider how you want to protect their inheritance. The more protections you put in place, the less flexibility and control your surviving spouse will have over the inheritance.
Disinheriting a Family Member
You may want to leave a family member out of your estate plan. If you disinherit a family member who thought they might receive something, there is a likelihood that the family member may contest the will or trust. There is also an increased likelihood of your loved ones ending up in probate court to settle the dispute.
Estate Planning Priorities: Providing for Charities
Whether for tax or philanthropic reasons, giving money to charity can be a great way to leave a legacy. Just remember, the more money you leave to charity, the less that will be left for your loved ones.
Reducing Estate Tax Liability
Although estate tax only impacts high-net-worth individuals, potential tax liability is always something that you should consider. If you want to include estate tax planning in your estate plan, you may have to decide between saving your loved ones from estate tax liability and retaining control over some of your money and property while you are alive.
Do Your Estate Planning Priories Include Reducing the Amount of Income Tax a Trust May Owe?
When a trust owns accounts and property that generates income, it is subject to income tax. Unfortunately, a trust reaches higher tax brackets faster than an individual would. If you want the income to be taxed at the beneficiary’s rate (likely lower), the income may have to be given to the beneficiary and treated as their money for income tax purposes.
How to Prepare
- Make a list of everything you own and any outstanding debts
- List your priorities and the people or organizations you want to leave money to
- Rank your list
- Meet with trusted advisors
Creating an estate plan can be one of the greatest gifts you give to your loved ones. Schedule an appointment to learn more about how we can design a plan to meet your unique needs.
About Skvarna Law Firm in Glendora and Upland, California
Let a skilled attorney assist with your estate plan. So, contact us today to learn about your options (909) 608-7671. We operate offices in Glendora and Upland, California. Therefore, we provide legal services for individuals living in San Bernardino, Los Angeles, Orange, and Riverside Counties. This includes the cities of Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Montclair, Pomona, La Verne, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma. Visit SkvarnaLaw.com to learn more.
