7 Steps to Creating a Will and Estate Plan

ward-angela-Lancaster-County-PennsylvaniaBy Angela M. Ward, Attorney

Not everyone likes to think about death, but it is important to think about what will happen to your estate when you’re gone. More than half of Americans don’t have a will. If you are one of them, the state will decide what happens to your assets, and it may not be what you would have wished.

Without a will, anyone from parents to cousins to even distant relatives could inherit your assets. Those assets include bank accounts, investments, real estate, retirement accounts, and personal possessions such as vehicles, pets, jewelry, and artwork.

More importantly, your estate also includes identifying guardianship, identifying your dependents, and resolves other responsibilities. A will allows you to designate a guardian for your dependent children and provide for the care of relatives who may depend on you. Without a will, a court will determine guardianship, and that might include foster care.

Creating a will is not difficult and will give you and your loved one’s peace of mind. A valid will in Pennsylvania must meet certain requirements. A lawyer experienced in estate planning can guide you through the process. If you are a Lancaster County resident in need of assistance preparing a will, contact the Law Offices of Going and Plank in downtown Lancaster.

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If you already have a will, remember to review it annually or any time you experience major life changes, such as marriage, divorce, the birth of a child, or the sale or purchase of a major asset.

When creating or reviewing a will, keep these things in mind:

Choose an Administrator for Your Will

An administrator, or executor, will manage the transfer of your assets and make sure other details of your will are carried out according to your wishes. They also will take care of administrative duties, such as notifying banks, canceling credit cards, paying final taxes and bills, and notifying the Social Security Administration and other organizations. Choose either a trusted individual as your executor or a law firm if you have a more complicated estate.

Determine Guardianship and Make Arrangements for Special Needs Dependents

If you have a dependent with special needs, you’ll want to choose a guardian who will care for them the way you would. Consider a guardian who not only can care for your loved one, but also lives close to the resources they may need. Your estate plan may also include financial provisions to help support your special needs dependent. Remember that inheriting a large lump sum of cash could disqualify your loved one from receiving government assistance, such as Supplemental Security Income or Medicaid benefits. Instead, evaluate the creation of a special needs trust into which bequests and assets can be put. Since the money will not go directly to your loved one, it will not affect their ability to receive benefits. Instead, a trustee of your choice can spend the money on their behalf, covering expenses ranging from personal care to recreation.

Review Your Assets and Ownership Structures

Co-ownership is a popular strategy for simplifying the transfer of assets, such as homes, vehicles, and bank accounts. By making a relative the co-owner of your home or another major asset while you are still alive, ownership of that asset will transfer to them automatically upon your death. Doing so avoids a lengthy probate process, while also reducing estate and inheritance taxes. However, co-ownership also comes with risks, so do not make the decision lightly. For example, if the co-owner of your home declares bankruptcy, has credit issues, or defaults on a loan, your home may end up as an asset to be liquidated or seized.

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Consider Including a Charitable Donation in Your Will

You may want to continue giving to a good cause even after you are gone, and an estate plan offers many options, from creating trusts to bequeathing property or other assets. You can even name a charity as a beneficiary of your life insurance or retirement account. If you choose to leave a gift to a good cause, use the official name of the charity, the address, and registered charity number.

Review Retirement Accounts and Beneficiaries

Failing to review the beneficiaries named on retirement accounts, life insurance policies, investments, and other important accounts, is one of the most common and costly estate planning mistakes. Often, you name a beneficiary on an account years before your death and don’t give it another thought. But what happens if that beneficiary is no longer part of your life? Even if your will is up to date, it will not override a beneficiary designation on your important accounts, meaning those assets could go to an ex-spouse instead of your children or other loved ones. If your designated beneficiary dies before you, the asset may return to your estate, where it could be subject to debt or tax collection. To ensure your loved ones inherit your assets, review your beneficiary designations annually or any time you experience significant life changes, such as marriage, divorce, the birth of a child, or death of a spouse.

Choose Secondary Beneficiaries

One way to reduce expense after your death is by naming secondary beneficiaries, not only on important retirement accounts and tax-deferred accounts but also in your will. Employer-sponsored 401(k), insurance policies, 529 college savings plans, health savings accounts, and  IRAs typically give you the option of naming primary and secondary beneficiaries. In the case of a will, if your primary beneficiary dies, naming secondary beneficiaries cover who will inherit under these or other specific circumstances.

Understand the Role of Trusts in Your Estate Plan

Depending on the size of your estate and your distribution goals, a trust may be a good option for you. Trusts can bypass the costly probate process and make assets immediately accessible upon your death. There are a variety of trusts, some of which can be set up while you are still living. Testamentary trusts allow a third party of your choice, known as a trustee, to manage your assets on behalf of your beneficiaries. If you have children under 18, for example, a trustee can invest the inheritance or use it for the children’s needs until they reach the age of 18. Special needs trusts can help care for dependents with special needs while avoiding a lump-sum inheritance that could disqualify them from receiving government assistance. Creating certain trusts can also reduce federal estate taxes, but many estates in Pennsylvania do not match the monetary threshold to incur federal estate tax. Also, consider that trusts are more difficult and costly to create and may not be necessary for smaller estates.

An Estate Planning Attorney Can Help You Through the Process

You have many options to consider when planning a will, trust, business succession, or end-of-life health care. If you’ve been married, have children, own any property, or have retirement accounts or pensions, you may want to speak to an experienced estate attorney to ensure your estate planning documents accurately reflect your wishes, and make it easy for your loved ones to move through probate. Contact the  Law Offices of Going and Plank today to create, revise, or review your will, trusts, or estate plans.

Want to find out more about Angela M. Ward? Read these articles and blogs:

Why You Need an Experienced Business Attorney

The ABCs of Business and Association Formations

Contractor Scams, and how to Avoid Them

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9 Reasons Lawyers Should Review Contracts

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Angela Ward

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