A lot of hard decisions must be made during the estate planning process. Individuals who are creating an estate plan must identify heirs and beneficiaries and determine what type of asset distribution plan fits the needs of everyone involved, as well as the estate itself. While many people choose to leave their assets to their spouse and their children, a fair distribution of estate assets is not always an equal distribution.
Estate planning can be an intricate process. Depending on the circumstances, numerous legal documents may need to be drafted, and the language in key provisions can be critical to their interpretation. Therefore, a lot of care needs to go into the drafting of these documents with three major components in mind: communication, clarity, and customization.
Readers of this blog might be aware of the numerous estate planning tools they have at their disposal. Many Arizonans choose to utilize a living trust as part of their estate plan as it allows assets to bypass the probate process. One of these trusts can also give a testator a certain amount of control over those assets, thereby allowing him or her to dictate the terms associated with release of trust assets. Yet, in order for a living will to be effective it must be constantly updated. Those who fail to put all of their assets into this trust may wind up having those assets subject to a distribution that is not in accordance with their wishes.
Creating a will is a strong first step when it comes to estate planning. This document, even in its most basic terms, can be a powerful way to ensure that one's estate is appropriately addressed after his or her death. When a will isn't created, the distribution of one's assets is handled in accordance with state law, which may not coincide with an individual's wishes. This can lead to a lengthy and highly contested process that oftentimes pits family members against each other. This is one of the many reasons why Arizonans need to make sure their wills are clear and thorough.
We recently wrote about the trouble Aretha Franklin's estate is having due to the recent discovery of a number of handwritten wills. These documents can be problematic for a number of reasons. Oftentimes it's unclear who is being named as a beneficiary or heir. Also, the terms of trusts are vague or ambiguous. Other times there are contradictory terms. Each of these issues can present problems when the will is supposed to go into effect. Under such circumstances, untangling the testator's intentions can be a nightmare. In other cases the will is deemed legally invalid.
Many Arizonans think of wills as simple documents they can utilize to dictate how their assets will be distributed upon their death. While this is true in a broad context, these estate planning vehicles can be quite detailed, and they are automatically legally valid. Instead, estate planners need to be careful to ensure that their wills are abiding by applicable laws unless they want to risk their assets falling into the wrong hands.
If Sun City residents have heard of the estate-planning debacle surrounding the estate of famed singer Aretha Franklin, then you know just how dangerous it can be to forego estate planning altogether. Yet, even mediocre estate planning can prove problematic. It can threaten to tie an estate up in probate for a long time, draining the estate of resources, wasting loved ones' time, and causing familial strife.
Wills are usually the most basic form of estate planning. They can be relatively simple in nature and easy to create for Sun City residents. Yet, a 2017 survey found that 58 percent of Americans have not created any estate planning documents. This is a staggering number, especially considering the grim reality that the assets of many of these individuals may be passed down in a way that is counter to the deceased individuals' wishes. This can cause significant financial hardship for those who may have been an intended heir but was not accounted for in an estate plan.
Generally speaking, the more assets an individual has the more detailed his or her estate plan needs to be. The same holds true when there are multiple heirs in play. While most people focus on divvying up their personal property, familial home, and bank and retirement accounts, others need to consider matters such as what to do with a business. If this matter isn't appropriately addressed, a business can be susceptible to poor ownership and management.
It's no secret that the estate planning process can be scary. It requires you to contemplate your own passing, and it forces you to take a hard look at your assets and your estate's financial health. This is enough stress to cause most people to procrastinate when it comes to estate planning. However, as we discussed in last week's post, dying without a will and other estate planning documents can have tremendous consequences, including undesired distribution of assets and excessive costs.