Creating an estate plan is a lot like getting into better shape. We all know we should do it, but most of us never make the first move because the task seems daunting.
If you need an estate plan, you can be sure that the seven easy steps outlined below will help you. Gardner Law Office can assist you at any phase of the process.
Step 1: Get a will in place or update your will
In your will, you will name an executor who will have the power and responsibility to pay your debts and distribute the remainder of your estate according to your wishes. If you die without a will, your property will pass to your survivors based on your state’s laws of intestacy. In Pennsylvania, that means that your spouse and your children will split your legacy. If you are single, your assets will go to blood relatives even if you would have preferred a friend to inherit them.
You should also safeguard the assets that you leave minor children by creating a trust for their benefit in your will. In it, you name a trustee who will follow your instructions for managing the assets that you leave to your kids. The trustee can be a relative, friend or professional, such as a banker or lawyer. If you fail to establish a trust in your will for your minor children, a court will name a guardian to oversee the property they inherit.
Step 2: Name beneficiaries
By working with an attorney on your estate plan, you will want to update your beneficiaries as life circumstances change such as a death or divorce.
Step 3: Dodge estate taxes
A vast majority of Americans do not have to fret about federal estate tax. Only about half of 1 percent of estates will owe federal estate tax under the current law, which Congress passed on January 1, 2020.
The federal estate and gift tax exemption is now $5.25 million and will increase with inflation each year. Spouses may combine their exemptions, so married couples can leave or give away $10.5 million without owing any federal estate tax. Say, for example, that a husband and wife each have $3 million in assets. If the husband dies first and leaves everything to his wife, no estate tax is due. When the wife dies, leaving $6 million to their children, no tax is due because her estate can use a portion of the husband’s unused exemption.
Step 4: Leave a letter
Sometimes, everything you want to tell your survivors does not belong in your will. If you want to describe what type of funeral arrangements you desire, for example, you can do so in a separate letter. You can also use the letter to list items of sentimental value that you want certain heirs to inherit. Give the letter to a trusted relative, friend or your attorney. Pennsylvania does recognize such letters as legal documents, but your family members and other loved ones are likely to respect your wishes.
Step 5: Seek an attorney to also create a durable power of attorney
Estate planning is not only about taking care of your survivors. A complete estate plan should also ensure that your wishes regarding your money and your health care prevail even if you become too sick to make your own decisions.
Create a durable power of attorney (DPA) so someone can manage your money if you are ever too sick to do so. In this document, you name a trusted relative or friend to take charge of your finances when you cannot. Unlike an ordinary power of attorney, a DPA remains in effect after you can no longer manage your own affairs. If you do not have a DPA and become incapacitated, a relative or friend will have to ask a judge to appoint a conservator or guardian to manage your assets and pay your bills.
Choosing the person who will serve as your financial proxy is often a difficult decision, and sometimes a relative is not the best choice.
Step 6: Seek legal advice on creating an advanced health care directive also known as a living will
To maintain control over the type of medical care you receive when you are near death, you should sign a living will and a DPA for health care.
With a living will, you state the type of medical procedures that you do or do not want. In a DPA for health care, you name a health care agent or proxy who makes sure that doctors and other medical professionals carry out your wishes if you are too sick to speak for yourself.
Step 7: Organize your digital and paper files
Your executor will remember you more fondly if you organize your estate-planning paperwork and financial records, and store them in a safe yet accessible place. Keep the original documents in your lawyer’s vault or in a bank safe deposit box or home safe. Be aware that if your spouse or someone else is not the co-owner of your safe deposit box, your executor may have to file a petition with the court for permission to open it.
Pull together any of the documents your executor will need, such as the deed to your burial plot; insurance policies; statements from your bank, brokerage house and mutual-fund accounts; and pension and other employee benefit information. Maintain an up-to-date list of your assets, the names and telephone numbers of your legal and financial advisers and an inventory of the items in your safe deposit box. Store such documents at home in a locked, waterproof and fireproof metal box, file cabinet or safe.
And finally, review your estate plan at least every five years. Make sure all of your documents still reflect your desires, and that your beneficiaries and financial and health care proxies are still willing and able to serve. In addition, you should revisit your estate plan if Congress revises the estate tax law or whenever there is a major change in your life, such as a birth, death, marriage or divorce.
Create a will or build an estate plan with the team at Gardner Law Office
If you are looking for assistance with an estate document or administration including wills, living wills and power of attorney, Gardner Law Office is always available to assist you.
Gardner Law Office | 740 Main St., Bethlehem | 610.866.9529 | gardnerlawyers.com
This post is a sponsored collaboration between Gardner Law Office and Lehigh Valley Style.
