Estate planning involves more than merely passing along assets.
Planning for the future is not easy.
It involves considering any number of possibilities.
For example, what will happen if you become incapacitated?
You will be unable to make your own financial or heath care decisions should this happen.
A recent fosters.com article asks an interesting question: “What happens to your debt in estate planning?”
Indeed, careful estate planning is required for this and any number of other scenarios.
You will want these to give a specified individual the authority to make your financial and health care decisions.
What types of decisions might this individual need to make?
Financially, the individual will likely need to pay bills (i.e., debts).
In regards to health care, a decision to remain (or not remain) on life sustaining treatment may need to be made for you.
Although you may never become incapacitated, we will all die.
You will need to plan for what will happen when this inevitable event comes to pass.
What are your options for passing along assets upon your death?
The first and most common estate planning tool is a will.
What does a will do?
A will instructs the probate courts regarding how you want your belongings distributed when you die.
A will is also how you name an executor for your estate.
What are the responsibilities of an executor?
An executor works with the probate court to secure and distribute assets as well as to inform or pay any creditors who may have claims against your estate.
Another estate planning tool would be a revocable living trust.
What does such a trust accomplish?
First, a trust is outside the purview of the probate courts.
You can manage a trust while you are alive and designate a successor trustee to take over the role should you become incapacitated and distribute assets to heirs when you pass away.
Is creating a will or a trust all the estate planning you should do?
Certain assets do not pass through a will or a trust.
What are examples of these assets?
These assets would include joint accounts (but only until there is no surviving "joint owner"), IRAs, 401(k)s, annuity contracts, brokerage accounts, bank accounts, or life insurance policies.
You will need to specifically designate who is to receive each asset.
Remember, you will need to update these beneficiaries for each of these assets.
Merely updating your will would not do the trick.
What happens to your assets if you have debt?
In an ideal world, you would not die with debt.
In general, your beneficiaries would not be responsible for paying off you debt.
However, this is not always true.
If your beneficiary is a co-signer or jointly owned the debt with you, then he or she will be responsible for paying it off.
Creditors may also be able to seek payment from your estate.
This includes unsecured debts such as credit card debt.
In these instances, your executor or trustee will be responsible for settling the debts from your estate.
As you can see, there are many things to consider when planning your estate.
Work with an experienced estate planning attorney to help you meet your goals and set your executor, trustees, and beneficiaries up for success.
So, how do you find an "experienced" estate planning attorney?
First, ask around. Friends, family and other professional advisors are trustworthy sources.
Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").
Third, either way, verify! Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.
In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: fosters.com (November 22, 2017) “What happens to your debt in estate planning?”