Who Needs an Estate Plan?
The Short Answer is Everyone.
A well-drafted estate plan ensures that your needs are taken care of if you are unable to do so yourself because of sickness or incapacity. It also ensures that your loved ones are taken care of when you're gone. Simply stated, an estate plan provides peace of mind for you and the people you care about the most.
Estate planning is essential if you fall into any of these categories:
You have minor children
If you have minor children, an estate plan allows you to (1) designate a guardian to take care of your children if you die, and (2) create a trust that designates who will manage your child’s finances and how, and when, your assets will be distributed to your child. Without an estate plan in place, a Court is left to make these critical decisions on its own. You know your children better than anyone, and you know what is best for them. Having an estate plan enables you to take care of your children if the worst were to happen. Click here for more information on Estate Planning for Parents.
You own real estate in Idaho
In Idaho, if you own real estate, your estate automatically has to go through probate. What’s the problem with probate? Probate is a judicial proceeding in which a judge supervises the disposition of a person’s assets after they pass. If this sounds expensive and time-consuming, you’re right. It’s also a public process. Not only do your heirs need to hire an attorney to take your estate through probate, they also have to wait several months to receive their inheritance. A well-drafted estate plan with a living trust as the organizing document allows you to avoid probate entirely. Click here for more information on Estate Planning for Homeowners.
You own real estate in more than one state
If you own real estate in more than one state, it is especially important to create an estate plan that addresses how all your real estate will be distributed after your passing. By creating a living trust and transferring all your real estate holdings, wherever they are located, into your trust, you will ensure that your estate will not be probated in multiple states (which can be very expensive, especially in states such as California), and be distributed in an expeditious and cost-effective way. Click here for more information on estate planning when you own real estate in more than one state.
You have a business
Whether you’re a one person show or have employees, you want to ensure your business is properly addressed in your estate plan. Your estate plan should identify a key person in your operation who can take over your business and continue to run it after your passing, or liquidate and close your business, while maximizing the return for your beneficiaries.
You are newly divorced or getting a divorce
If you are newly divorced, it’s important to ensure that your ex-spouse is removed from making any financial or health care decisions for you, and that your assets are properly designated to go to beneficiaries other than your ex-spouse. If you have minor children, it’s critical to put in place an estate plan that guarantees your ex-spouse would not be managing any of your children’s money if the worst were to happen. Click here for more information on Post-Divorce Estate Planning. If you are getting a divorce, it's critical to revise your estate plan (or put one in place if you don't have one) to ensure your spouse does not inherit your assets if you die while your divorce is pending. Click here for more information on the Five Essential Estate Plan Changes To Make During a Divorce.
You are single
If you are single, it's important to ensure you designate the right individuals, whether close family members, friends or other professionals, to make key financial and health decisions if you become incapacitated or die.
You have a blended family
If you have a blended family, it’s important to balance making a fair distribution to your children from your prior relationship with taking care of your current spouse after you are gone. A well-drafted estate plan will help you implement your wishes, and consider your overall assets to make an equitable and fair distribution to all your loved ones.
You have received an inheritance
In Idaho, even if you are married, your inheritance is considered your “separate property.” However, if you take your inheritance and “commingle” it by depositing it into a joint account, or adding the name of a spouse to your inherited real estate, you run the risk of converting the property into “community property.” In the case of a divorce, your spouse would be treated as half owner of the property and entitled to half of your inheritance. It is imperative to work with an attorney to properly plan for your inheritance, and consider creating a separate property trust for the inherited assets, which will be separate and apart from a joint trust you may have with your spouse.
You are caring for a loved one with special needs
Whether they are your child, sibling, parent, or other loved one, estate planning is critical when caring for someone with a disability. If you gift or pass on your assets directly to a loved one with special needs, their need-based government benefits will be terminated. To avoid this, you want to create a special needs trust for your loved one, to ensure that they still continue to qualify for their current government benefits, and instead use the inheritance to subsidize what their government benefits don’t provide for them.
You have health concerns
Having comprehensive medical documents, including a medical power of attorney and living will, ensures that your wishes are documented and that your loved ones know your healthcare wishes. For more information about selecting a health care agent, click here.
You have significant assets, and are concerned about taxes
If you have significant assets, it’s important to take into consideration estate taxes and capital gains taxes. A well-drafted estate plan will help you determine if gifting during your life time makes sense, and which type of assets have better tax consequences when left to a beneficiary after your death.
You want to support a favorite charity, nonprofit organization or cause after your passing
If you want a portion of your estate to pass to a charity, nonprofit organization or other cause it is vital that you create an estate plan that addresses your wishes. In addition, since many charitable organizations are tax exempt, careful estate planning ensures that your charitable distributions will provide the most tax benefit to your estate, as well as the charity who is receiving your funds.