When planning your estate it is important to understand the difference between probate and non-probate assets.
Many people believe that if they have a will, their estate planning is complete, but there is much more to a solid estate plan. A good plan should be designed to avoid probate, save on estate taxes, protect assets if you need to move into a nursing home, and appoint someone to act for you if you become disabled.
Do you have a will? A durable power of attorney? A health care proxy? If not, why not? Failure to create an estate plan risks causing discord in your family for generations to come.
Your will is a legally-binding statement directing who will receive your property at your death. It also appoints a legal representative to carry out your wishes. However, the will covers only probate property.
Don’t assume your estate will automatically go to your spouse when you die. If you don’t have an estate plan, your spouse may have to share your estate with other family members. If you die without an estate plan, the state legislature has decided where your assets go.
There are lots of misconceptions about estate planning, and any one of them can result in costly mistakes. Understanding who needs an estate plan and what it should cover is key to creating a plan that is right for you.
Many websites offer customized, do-it-yourself wills and other estate planning documents. Although such products are convenient, using them could create serious and expensive legal problems for heirs.