Without proper planning, there may be a mix of legal, tax, family, and financial issues.
No one wants to think about or plan for their death. But not planning ahead can leave various unresolved issues for your family to deal with and questions about what you might have wanted. When you prepare your estate in advance, you can count on an easier transition of estate assets to your loved ones. Resolving your estate through the government/legal system can be at great expense and time for your heirs.
If you haven’t taken the time to plan out your estate and you leave no estate legal documents behind, it is likely that state law will require your closest blood relatives to divide your estate. Your assets will be frozen and a judge will appoint an administrator to oversee the settling of your estate and any wishes you might have had for distribution will likely go unfulfilled. If you have minor children, a court-appointed guardian will be assigned.
If you leave behind a last will and testament, the executor that you named in that last will and testament will oversee the management and distribution of your estate assets to the heirs or beneficiaries that you designate in your will. Your executor will likely retain an attorney or law firm to prepare the court documents for probate which must be filed at the courthouse. A judge will order your financial institutions and other third parties to transfer assets in your name at your death to your heirs. In short, estate planning documents let you decide who and how people will take ownership of your assets.
If you create a living trust and transfer assets to your living trust during your lifetime, your assets will be distributed to trust beneficiaries after you die. A living trust helps to avoid the need to go through the court and the attorney-involved probate proceeding that is required when you die with assets in your name. Another benefit to the living trust is that living trust assets can be disbursed to beneficiaries within a short period of time after you pass away. Your successor trustee can step in to maintain trust assets and expedite distributions from the trust to your beneficiaries.
If you pass away without a Will or with a Will, the court proceedings and any documents will be public record. Many people choose to use a Living Trust, which does not become public record in order to keep their information more private. This could provide added protection to your heirs avoiding potential perpetrators from using this information for bad purposes.
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This post was written by MyAdvocate's team of estate planning attorneys.