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. Without proper planning, there may be a mix of legal, tax, and financial issues that relatives will have to sort out through the legal system.
Without proper estate planning, lawyers and judges will be involved
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.
Estate planning lets you choose who manages your estate
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 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.
A living trust can help avoid the courts altogether
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.
Why plan ahead?
What happens to your assets when you die depends in large part on the preparation and planning that you do during your lifetime. Failing to plan requires that your state laws dictate who inherits from you. You can and should be proactive in your estate planning so that you control what happens to your assets when you pass away.