Are You Aware Of Your Estate Planning Options?
Estate Planning Options
You might not think of it that way, but estate planning is an integral part of your retirement planning. Over the years, you might amass a lot of assets to carry you through your retirement years, with the hope to leave some of that to your loved ones when you pass away someday.
In order for that to happen, and to ensure that your wishes are followed to a tee, you must have an estate plan. There are different options to choose from when planning an estate.
So, the question is, “What different types of ways to plan your estate?”.
#1. Spend Every Dollar
One estate plan is to spend your every last dollar and die with nothing. You won’t have to worry about probate. The only problem is, you’ve got to plan this out with perfection. If you run out of money too fast, then you have failed trying to implement this plan.
Get out that crystal magic ball. You’re going to need it.
#2. Die Intestate
The second style of estate planning is “dying intestate” or with an intestate estate.
What does “intestate” mean? I know it sounds like a horrible disease, but it’s not.
Intestacy just means you died having assets without doing anything.
So what happens when you do not plan. Don’t worry. The government’s got your back — and your wallet. The government has a plan for you.
What is that plan?
Your estate must be distributed according to certain rules made by the government by a process called “probate”. The government created the rules of intestacy. You can find them in the California Probate Code.
#3 Put Everything in A Joint Tenancy
Joint tenancy is a very foolish way to avoid probate court. If two people own a piece of property as joint tenants or in joint tenancy, the property will pass to the other person on title when you pass away.
Please be aware that this style of distribution should almost never be used. I wrote another article explaining the reasons why you should not put something in joint tenancy. It has to do with taxes.
I can almost assure that you will not like the tax consequences. Nothing is worse than the call after someone passes away with a property held in joint tenancy. There’s also the risk of your assets going to the creditors of the other person that you put on title.
A lot of people end up doing this, thinking that it is a cheap alternative. It ends up costing them hundreds of thousands of dollars, especially for homes that were bought a long time ago.
Planning your estate the right way before problems arise can spare you unnecessary stress. Discover how you can get it done seamlessly by scheduling a strategy session today.
#4 Create A Simple Will
Another very old way of planning your estate is by creating a simple will.
Repeat after me — a will just tells the Probate Court how you want to distribute assets. IT DOES NOT HELP AVOID PROBATE.
The will also tell us who’s in charge. Although this is a very archaic style of estate planning, you could still do it. A will is still valid if done properly.
#5 Create A Bare Bones Cookie Cutter Trust
These kinds of trusts are the ones you get online from companies such as Legal Zoom. These are the trusts you get from paralegal services. The only problem with these types of documents is that they always leave out something important, forget parts that could have avoided conflict in the family, or have ambiguous clauses (rushing you to the Courts).
Since they are not uniquely created for you or your family’s needs, these cookie-cutter trusts contribute to estates ending up in probate court. In another article, I thoroughly discuss the reasons why these online bare-bones trusts don’t work.
#6 Create A Family Wealth Trust
Finally, you could create a complete family wealth trust, often called a legacy wealth trust. Known also as the family trust, the living trust or the revocable trust, these documents can prevent all issues associated with the above styles of estate planning.
A well thought out and written trust can prevent probate, your beneficiaries from spending the inheritance, creditors from reaching your children, and loss of government benefits.
Planning your estate with the right tools for your family will spare you unnecessary stress. Discover how you can get it done seamlessly by scheduling a strategy session today.