Q: Do you need to be wealthy to need estate planning?
A: If you own anything and if you love anyone, estate planning is imperative. The importance of planning for after your death and/or knowing how to respond after the death of someone else cannot be understated. Planning for death saves your loved ones unnecessary heartache and gives everyone peace of mind.
Q: What is probate?
A: Probate is designed to create a “final accounting” upon death. It is the legal process of “proving up” a Will, or verifying that a Will is valid. Probate is absolutely necessary if a person dies with a Will. Probate may also be necessary where assets were not assigned prior to death.
Q: Is probate expensive and time consuming?
A: It depends. Depending on the complexity and the value of the estate and depends on whether the beneficiaries/heirs can work together. Also, depends on the thoroughness with which accounting had been carried out before death, probate can either be a relatively simple task or a very complicated one. Probate may be costly.
Q: Should I utilize a trust for my estate planning?
A: It depends on the assets, complexity of the assets, and the person. While having a living trust can significantly reduce costs compared to probate, there is still a considerable amount of work to be done in properly administering even a simple living trust. The services of an attorney are recommended.
Q: Should I utilize a will for my estate planning?
A: If you do decide to use a will, make sure you understand that there are very specific requirements for a will to be considered valid. Often times, people are able to complete a simple estate plan without the use of a will. Do your research, ask questions, and get help if necessary.
Q: What do I do about Social Security?
A: Social Security will continue to send out benefit checks until they are notified of an individual’s death. The executor/spouse/trustee should contact the local Social Security Administration office and notify them of the death, or if a benefit check is received, send it back with a letter notifying them. This is important. If checks continue to be deposited, the recipient can incur liability later when Social Security learns of the recipient’s death.
Q: Who takes care of my minor children after both parents pass away?
A: A guardian may be designated in your will. Have a “just in case” conversation with who you have in mind before choosing them for your will.
Q: My only substantial asset is my house and/or my car. I have one person in mind for my house and/or my car. What happens after I die?
A: A very important part of estate planning that is too often ignored is assigning a beneficiary for each of your assets. For example, you may consider the option changing the owner of your house to you and a loved one as “joint tenants with rights of survivorship.” Ownership decisions are not to be made lightly but they are to be made! Please be sure to consult with an attorney and an accountant to assess any legal issues and/or tax issues.
Q: What is a homestead exemption and why does it matter to me?
A: A homestead exemption status (which saves you money on your property taxes) is likely altered or eliminated when someone passes away. Being aware of this change is important because it allows less of an impact to occur to yourself or your loved ones if planned for accordingly.
Upon the person passing away, please be sure to notify the taxing authority and the property appraiser’s office of death. This will ensure that the homestead exemption that is on the property will not continue because if it does continue, the taxing authority will go back and require you to pay the benefits that you have received from the homestead exemption indication. The taxing authority will place a lien on your property and then tell you you have to pay!
Q: What happens to my debt when I pass away? Who pays?
A: Any debt that is of ONLY the decedent will die with said decedent. However, if there is a cosigner or joint borrower on any debt, the living borrower will have to shoulder the burden of the full debt.