What Exactly is involved in the estate planning process?

Deciding to plan for end-of-life circumstances is among the most important aspect of your life no matter your age. For every one of us who assumes that we have decades left to live, there is the unfortunate person that we know who passes away from something sudden. Not that this is going to happen to you, but the fact remains that we have no idea when our lives will come to an end. This isn’t necessarily supposed to leave you feeling warm and tingly, but it is supposed to stir you to action or at least the planning stage immediately before action.

What we all do know is that at some point each of us will pass on. The exact moment, not so much, but the general idea that there will be an end to our lives is something that I feel comfortable talking about since we know it’s coming. We may not like discussing it and it may make us feel a whole lot of different emotions but the end of our lives does not have to be a time of stress regarding money and planning. Rather, you and I can take the time now to plan for end-of-life scenarios so the actual end of our lives, whenever that is, can be spent enjoying those around us.

For most of us, estate planning means drafting a will. However, before you get to the point where it is time to get that will written out you need to be sure of the steps that you followed to get to that point. Make no mistake, having a clear understanding of all of your assets as well as where you want your property to end up at the time of your passing is not something that you should consider overnight. Rather, to plan for this takes some intentionality. Don’t just wander into the process of drafting a will. Rather, take the time to create a will that best suits you and your family.

Understanding what you own

If you are serious about creating a will or any other type of estate planning document, then you need to know what property you own. Guessing won’t be a big help. Nobody is perfect and you may end up leaving out of your will pieces of property that are important. What you can do to prevent this is to create a list for yourself of all the properties that you own. It can be a sophisticated spreadsheet with multiple tabs, or it can be a simple list created on a legal pad. Whatever helps you organize yourself and your life better is what you should go with.

Something that you could begin doing right now is to walk inside and outside of your home to look at everything. I’m willing to bet that you own a couple of things that you had forgotten about. The outside of your home could provide you with a surprise if you haven’t looked at your toolboxes or garage in some time. When you have inventoried your property, you will be better positioned to be able to think more critically about who you want to be able to end up with that property at the end of your life. Certain people may have a connection to certain pieces of property, for example.

Not everything you own must pass through your will

One of the most significant misunderstandings of this entire process is that everything you own must be included in the will. This is simply not true. In reality, a significant portion of the property that you own can be transferred to designated beneficiaries without including them in your will. This includes documents like retirement accounts and bank accounts. A retirement account will allow you to list a primary and secondary beneficiary on your account so that the money within that account can be transferred upon your death. In a bank account situation, you would need to contact the bank or credit union to be able to list a person as your payable on death beneficiary. This individual would only need to provide proof of your passing to the bank to have the funds in your accounts distributed to him or her.

Important elements involved in estate planning

Otherwise, when it comes to estate planning there are some basic pieces of information that you need to be aware of before you enter into the process. Let’s start with how estate planning is not limited to the creation of a will. Certainly, depending upon your situation a will is a great place to begin this journey. However, power of attorney documents, trusts, living trusts, and other estate planning mechanisms are powerful tools that can be used to your advantage at the end of life circumstances. Learning about these tools is a powerful lesson that can shape the future of your family, as well.

Not all property can be held

Depending upon your circumstances, much of the property that you own may not be tangible. Cash and jewelry are things that you can hold in your hands. Investments, retirement accounts, bank accounts, and items of this nature cannot be held physically but carry with them a great amount of value. Many times, you may have even left some investments unchecked for many years. An account that you haven’t touched in 10 years may be worth significantly more now than you last checked on it. The creation of an estate plan is a great reason why you should go through and inventory all of your assets no matter if they are physically held or not.

Debts matter when it comes to estate planning

So far in today’s blog post, we have only discussed matters related to property. The other side of that coin is debts that you may owe. Some debts, like student loans, die with you and will not become an obligation of your estate unless they are privately financed. Then you would need to check the terms of your loan. Mortgages, car loans, credit cards, and the like are common debts that many of us hold. In that case, you can begin to inventory those debts. Depending upon your financial circumstances you may want to begin a plan to pay those debts off, so they do not become a part of a potential probate situation after your passing. Certain debts will need to be paid out of your estate.

When an inventory is complete make extra copies

Once you have gone through the process of creating a “master list” which contains all of your property and debts you should try to make a few copies. The first copy can be kept by you in a safe place. Any additional copies can be provided to your spouse, family member, or ultimately the person who will be helping you create any estate planning documents. This is a great way to make sure that the people in your life are aware of what is happening associated with your estate and your life. The last thing you want is to catch your family by surprise when it comes to estate planning matters. Remember the reason that you are likely going through all this trouble is to benefit them. Catching them off guard with a bunch of debt or anything else that is surprising would not be serving them well.

The importance of retirement accounts

Virtually nobody wants to talk about retirement accounts. Retirement accounts are one of the driest and most unexciting topics around. However, retirement is a concept that eventually becomes relevant to almost every single one of us. The planning that we do for retirement is critical to golden years planning and can also play a significant role in our estate planning. Having up-to-date beneficiaries on accounts that allow you to do so is a simple place to begin. If you have an ex-spouse or person who is deceased as a beneficiary, you will probably want to change that person’s name for someone more suitable.

A big point I would like to make in this regard is that if you put something in your will that is contradictory to these beneficiary designations then the account beneficiaries will still be what matters when it is all said and done. For example, if you leave a retirement account in your will to a child of yours but the actual account lists your ex-wife as the beneficiary then your ex-wife will end up with the money. That may have been the last outcome that you wanted to see happen.

Go to the bank

As we talked about at the beginning of today’s blog post, many checking and savings accounts allow you to list payable on death beneficiaries. This is a simple tool that can prevent the funds in these accounts from having to go through probate. Probate is a legal process that requires the executor of your estate to file your will in court and to get permission from the judge to fulfill their obligations as your executor. This process takes time and money. The money portion of things will come out of your estate. Meaning that the people that you promised money to in your will receive less due to the probate process needing money off the top before any distributions can even occur.

What you can do is contact someone with your bank or credit union to determine if any of the accounts that you hold with them can be paid out directly to a beneficiary rather than having to wait for the probate process to complete. The last thing you want to do is make life more difficult for your family after you pass away. Listing people as beneficiaries on these accounts is a great way to avoid the mess that probate cases can sometimes become.

Who is going to oversee matters related to your estate after you pass away?

For a will, the person who will oversee executing your directives within the will after you pass is known as an executor. This person will be responsible for following your wishes and generally overseeing the entire process. This is a big responsibility. You should think hard about who is best suited in your life to fulfill this obligation. Many people assume that their spouse should automatically be included as the executor of your estate. However, consider the emotional circumstances of the end of your life and you may realize that your spouse would not be best positioned to take care of financial matters while he or she is grieving your death.

Whoever you choose to act as your executor should be a person of integrity and someone that you can trust. Nobody is perfect, but if you can think critically about who you know who can remain on task, be trustworthy, and generally has your best interests at heart that is the sort of person you should be considering as an executor. When you determine who should be named as your executor talk to him or her before putting their name in your will. The person may not want to serve in that role or be otherwise unable to do so. Imagine the shock this person may experience to learn that he or she has been named as executor after you pass away unless you inform him or her of your intentions.

All adults need to have a will

something that many people do not realize is that every person over the age of 18 needs to have a will. This is true 4 wealthy people poor people, young people and old people, and everyone in between. Having a well means that you have considered your financial circumstances thoroughly he’d have made plans for how the property you own will be divided up upon your passing. Being intentional about these parts of your life is a critical step toward estate planning.

Even though the Texas probate code contains certain statutes and provisions on how to divide property between heirs that do not mean that you should assume that these statutes will divide the property you own in the fashion that you would like. Immediate family members take precedence when it comes to these statutes. If you would prefer for your immediate family not to inherit or receive most of your property after your passing, then you need to have a will. A church or other nonprofit organization that you would like to leave money to after your passing will almost certainly not receive anything out of your state unless you have a will.

A will can also help with the process of establishing who will be caring for your children after you pass away. For many families, the role of the provider and caretaker may be divided. Oftentimes, one parent is the primary source of the finances and the other is the primary caretaker. This means the loss of either parent can cause a tremendous financial burden on the surviving parent. In addition, situations do occur where two parents pass away at the same time, such as an accident or other event. For other families, there is only one parent. Therefore, if that parent dies, the children will be left in a very difficult situation. In both cases, if those parents or guardians lack an estate plan with guardianship designations, the State of Texas would determine who ultimately cares for the children until they reach adulthood. Rather than allowing the state to have this level of autonomy you can take charge of the situation and help your family to have some Peace of Mind as you begin the estate planning process.

Something it will also accomplish for your family is that it makes your wishes known for your estate and property before you pass away. We have all seen a movie or television show whose premise is based upon the idea that someone who recently passed away did not share their intentions of estate planning with their family before their life ended. I saw well cut 2 a lawyer’s office or fancy living room where the details of a will can be read aloud to those family members. Almost always something is shocking or otherwise surprising about the beneficiaries under a will. You do not have to let your family follow a similar path regarding estate planning matters.

Rather, you can take this opportunity to create an edit state plan that is based upon your best understanding of the property that you own as well as is created after careful consideration of who should receive certain property. Once you have taken the time to complete these steps you can discuss these matters with your family directly. While this may not make for the most casual of conversation, it will remove any doubt or surprises that your family may encounter after you pass away. Ultimately, what you want to see is a situation where your family can focus on your life and you’re passing in to share memories of you. The last thing you want is to have them be upset or otherwise confused at the contents of a will that you did not share with them when you had the opportunity.

Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan

if you have any questions about the material contained in today’s blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed estate planning attorneys offer free of charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas estate planning as well as how your family may be impacted by the filing of a probate case.

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