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A will is an important way to distribute your assets, financial and otherwise. One major limitation of a will is that you have to die before it can become effective; in other words, if you're incapacitated, a will has no legal effect, so any health care proxies or durable powers of attorney you might have will guide any decisions made on your behalf. This could create problems if you need to complete financial transactions with outside parties who have trouble accepting or even refuse to accept a power of attorney.
In legal terms, probate is the general administration of your estate — with or without a will. Your will should contain the name of your executor. If it doesn’t, then an administrator will need to carry out the probate process instead. This might result in your assets being used to pay the liabilities for your estate before anything remaining can be distributed to your and distribute your assets to beneficiaries.
Are you receiving bill after bill following the death of your loved one? If so, it’s important that you understand the rules of posthumous bills as well as your rights when it comes to paying your deceased relative’s debts.
It is somewhat unusual to highlight 2026 taxes in 2024, but we are in an unusual situation: Many of the provisions in 2017's Tax Cuts and Jobs Act will expire at the end of 2025 unless Congress acts to extend them. Taxpayers need to be aware of how they will be affected so they can be prepared, especially when it comes to estate and gift taxes.
You may be convinced that you need an estate plan, but you're fuzzy about what it covers and even how to make one. One great place to start is to determine your net worth. Add up rough estimates of the values of your assets, including bank and investment accounts, jewelry, collectibles, cars and boats, as well as retirement plans. Don't forget the death benefit from your life insurance. Add to that any business interests or money owed to you and, of course, real estate.
A trust can be a powerful estate-planning tool, but contrary to popular belief, trusts do not make all taxes disappear. The families who set them up still need to consider tax consequences.
The physical and financial health challenges caused by the COVID-19 pandemic gave us time to rethink our priorities and expectations. Estate planning is one area that has received a lot of attention, and for good reason. Here are three basic areas to review as you reassess your estate plan:
Everyone wants to protect their families, even after they pass from this world. That’s the purpose of estate plans. But how do you know whether all of the elements of a good plan are in place?
Have you decided that it's time to consider estate planning and contemplate when and how to distribute your assets to your heirs? Realistically, you imagine that this process will entail a series of trade-offs to prevent emotion-laden family problems.
Major life changes, whether good or bad, can be so overwhelming that we fail to realize just how deeply they affect our estate plan. For example, if you get divorced, you need to update not only your will but also your 401(k) beneficiary designation, since the latter trumps your will.
In theory, parents can get as specific as they want, deciding which children and grandchildren should get the fancy lamp from the living room or the painting of the ship in the dining room. But unless they're items of great intrinsic value, that usually isn't done, and even if an estate is left equally to all the grown children, fights can break out over who gets what. There have even been situations where the first child on the scene cleans out the family house, leading to hard feelings and even lawsuits.
There are myths and misconceptions about estate planning. Here are the top common mistakes to avoid and help your family save thousands of dollars in unnecessary taxes and probate fees:
Few things are as traumatic as dealing with the death of a loved one. Just as we're experiencing pain, legal issues hit us: Insurance companies, reading the will, investments — suddenly it's overwhelming. And perhaps the most difficult issue is probate.
If you're like many people, you have a great deal of your wealth tied up in traditional IRA accounts. Why? The tax-free benefits have motivated you. But there's going to come a time when you—or your heirs—will have to pay taxes on this money. Instead of worrying about what you're going to do about that, you can follow a tax-saving strategy that considers designating your favorite charity or charities as beneficiaries of all or a portion of your IRAs. Then you can leave other assets to family members and other heirs.
An executor of a will carries out the last wishes of someone close who has died. The executor ensures that the rules that govern the administration of a probate estate are followed.
Here are three key tasks of the executor job: You don't necessarily create a trust and just forget about it. You may revise a revocable trust whenever your circumstances change. Perhaps you want to add a beneficiary. A trust can be revoked or amended at any time as long as you, its creator, are mentally competent. Having an updated trust will reduce the chances that your property will pass through probate.
How do you ensure that both your new spouse and your children from your first marriage receive an inheritance if you die before your newly married spouse does? Who gets the house — your new spouse or your children? How will your new spouse get by financially if you choose to provide an immediate inheritance for your children?
Trusts can be used as an asset protection tool and to help your beneficiaries avoid the cost and expense of probate. Trusts transfer legal ownership of assets to a trustee. The property is deeded in the name of the trust and the trustee is tasked with administering it as the grantor specifies. There may be more strings attached to an asset in a trust than if it were simply left to someone in a will.
You create a trust to protect, preserve and pass on your wealth to your heirs. But how do you keep your family money safe, not only from creditors, but also from the heirs themselves? Create a spendthrift trust. A trust is used to disburse in a controlled way money and assets you've accumulated over a lifetime. A spendthrift trust forbids beneficiaries from spending any money until they receive distributions.
Many people find it hard to come to terms with their own mortality, which can make transitioning wealth from one generation to the next very difficult. But putting it off, and worse still, not dealing with it, can be one of the worst mistakes we can make.
Payable-on-death accounts are a type of bank account that, at the owner's death, lets the money remaining to pass directly to the beneficiaries named by the account owner. They offer an easy way to keep money out of probate. What's needed? Just properly notify your bank how you want to leave the money in the account — checking, savings, money market or certificate of deposit account. Even U.S. savings bonds can become a POD account. The bank and the beneficiary you name will do the rest. This bypasses probate.
If you find yourself on life support, who will make decisions for you? Unfortunately, it's been estimated that fewer than one in three Americans have what's called a living will or advance health care directive.
You may be thinking of creating a trust to help manage your assets — or maybe you don't even know how a trust could help. Here is a basic overview of trusts:
The right of inheritance applies to all property, including properties with mortgages attached to them. If you inherit a mortgaged property, a number of questions and concerns may pop up, including whether the mortgage can be assumed. You'll probably wonder how to record the deed and take title to the property.
An umbrella insurance policy is very helpful when you are sued and the dollar limit of your original policy has been exhausted. The added coverage provided by liability insurance is most useful to individuals who own a lot of assets or very expensive assets and are at significant risk of being sued.
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