One of the most commonly given reasons for not having an estate plan in place is that the entire concept of creating an estate plan is intimidating — people simply do not know where to start. If you fall into that category, know that you are not alone — and that there is help available. Ultimately, the best way to learn more about estate planning is by consulting with an experienced North Dakota estate planning attorney. For now, however, it may empower you to learn more about what is commonly found in the average estate plan.
What Is an Estate Plan?
When you hear the term “estate plan” you likely think first of a Last Will and Testament. While it is true that for most people a Last Will and Testament serves as the foundation of their estate plan, a comprehensive estate plan will include much more than just a Will. First and foremost, an estate plan should determine what will happen to your estate assets when you die and provide the method by which those assets will be transferred to the new owners. A Will is sufficient to accomplish this basic estate planning objective. A comprehensive estate plan, however, will also aim to protect and grow those assets while you are alive as well as ensure that you have sufficient assets to live comfortably during your retirement years.
Common Estate Planning Goals
Before you actually begin creating your estate plan you need to decide what estate planning goals you wish to achieve with your plan. Providing a roadmap for the distribution of your estate assets when you die is likely one of your estate planning goals; however, once you understand estate planning a little better you will likely find that you have additional goals you wish to achieve with your plan, such as:
- Incapacity planning — incapacity can strike at any time and if it does, a Will cannot help. If you do suffer a period of incapacity, who will manage your assets? Who will make decisions for you? Who will control your finances? The goal of incapacity planning is to answer these questions now, before they become an issue.
- Medicaid planning — the longer you live, the better the odds that you will need long-term care. The cost of that care could wipe out your entire life savings if you are unprepared. Fortunately, Medicaid will cover long-term care costs; however, qualifying for Medicaid benefits is complicated and may put your assets at risk unless you included Medicaid planning in your estate plan early on in your life.
- Probate avoidance — the probate of even a modest estate can take well over a year and may cost your loved ones a considerable amount, both in terms of time and money. Assets intended to be gifted to loved ones can be held up during that time; however, not all assets are required to go through probate. By including probate avoidance as one of your estate planning goals you can ensure that your loved ones will have access to intended gifts much sooner.
- Tax avoidance — federal gift and estate taxes can severely diminish the value of your estate considering the tax rate is 40 percent. If there is even a chance that your estate will be subject to gift and estate taxes you should include tax avoidance strategies in your overall estate plan to try and preserve the value of your assets.
- Business succession planning — if you own a small business, the future of that business will likely be at risk if something happens to you. Whether you plan to pass the business down to the next generation, or sell it and gift the proceeds to your family, you need to have a plan in place now to ensure that your wishes with regard to the business are honored should you become incapacitated or die.
- Retirement planning — in order to have assets left to pass down to loved ones when you are gone, you have to make it through your retirement years without depleting all your assets. For this reason, retirement planning should almost always be part of a comprehensive estate plan.
- Funeral planning — though you may prefer not to think about it, pre-planning and/or pre-paying for your funeral will significantly reduce the stress your loved ones must deal with while they are grieving your loss. In addition, it ensures that your final wishes are honored.
For more information, please join us for one of our upcoming free seminars. If you have additional questions about estate planning in the State of North Dakota please contact the experienced estate planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.