What Exactly Is Estate Planning Or An Estate Plan?
Estate planning or an estate plan is the creation of rules detailing how you would like your assets to be divided and distributed amongst your heirs, the identity of your heirs, and naming agents you wish to undertake the administrative actions to access and distribute your assets and to attend to certain personal actions on your behalf in the event of your incapacity prior to your death.
Do Most People Assume That They Don’t Have Enough Assets To Plan For Their Estate?
A common misconception is that most people don’t think that they have enough assets to undertake estate planning. Everybody has assets. There is a tendency to focus on the size of the assets are but focusing just on the asset size is a bit misdirected. The true purpose of estate planning should be on undertaking the right and ability that every person has to create their own rules for how they want the assets (whatever the size) they have to be distributed, who they want their heirs to be, and who they want to be in charge of the administrative process. By undertaking that right it will, more often than not, result in a more efficient means of distribution and division of the assets than if people were to ignore all of that planning.
Why Do We Need An Estate Plan?
There are several reasons to have an estate plan. However, it is important to keep in mind that everyone has an estate plan, whether they believe they do or not. State law will dictate where assets will go in the event that an individual decedent hasn’t prepared documents or titled assets otherwise. The reason to have an estate plan is to think and plan more critically on who exactly you want to benefit with your assets. It’s also important to know that estate planning isn’t just about the distribution of assets when you die; it’s also about planning for events of incapacity while you’re alive; an issue that is very much ignored. It’s conceivable with advancements in medical science that there will be an event of incapacity at some point during most everyone’s life. Without planning correctly for that event, there could be a significant cost and administrative process that would have to be undertaken for someone to be able to access your assets, pay your bills, and make medical decisions for you. This can be easily avoided by creating documents in advance of that event.
What Happens When We Die Without An Estate Plan Or A Will In Place?
If you die without an estate plan or will in place then the state in which you reside will dictate where your assets go. Because of this, everyone has an estate plan to decide where their assets will go as dictated by their own state legislature. The question becomes whether or not that complies with what the individual would otherwise want or intend. While it may, oftentimes it doesn’t particularly with the advent of more non-traditional families, second marriages, third marriages, single sex marriages, or not being married and not having children in which case the heirs that are provided for under state law are often not what an individual would intend.
It’s very important, particularly in those circumstances, that an individual has a proper will or other type of document of their intentions as to where they want their assets to go and who they want their heirs to be.
How Often Should We Review And Update Our Estate Plan?
The regularity with which people should review and update their plan varies. For example, in our office there are many themes that run through the estate planning for assets. One of which is that it’s never intended to be a transaction that someone does once in their life, then they check off the box, and never look at it again. We encourage our clients to consider the true nature of what they’re doing; which is capturing a period of time that we believe shouldn’t extend more than 3 years. Everyone should get in the habit of dusting off and reviewing what documents they’ve done at least every 3 years because, more likely than not, all of the documents that someone creates are ultimately going to be used. Another foundational point and theme of estate planning is to ensure that the documents that a person has are going to do exactly what they want and intend at the time they need it to be done without any controversy.
An important ingredient in that and an important habit to build is reviewing documents at least every 3 years. This doesn’t mean that you’re starting over from scratch every three years. But it doesn’t mean that you’re not either. It depends on the changes in your family and financial circumstances and the changes in the law would have occurred. If you’re faithful to that advice, then more likely than not, when death or incapacity occurs, the documents being used aren’t any older than three years and will do what needs to be done at that point.
For more information on Estate Planning In The State Of Virginia, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (703) 492-9955 today.
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