Knowing these top 10 estate planning tips can protect your loved ones should you have an accident or illness and become incapacitated or pass away.
Many people overlook estate planning, assuming it’s for the elderly only. It’s undeniably a morbid and boring topic, but it can be life-changing.
Without estate planning, your loved ones are at risk of losing the inheritance you want to give them either due to a court decision, tax, creditors or other reasons.
Here are our top 10 estate planning tips to protect your loved ones:
Our Top Estate Planning Tips for Families
1. Draft a Will
Drafting a will should be the number one estate planning priority for every American.
Shockingly, over half of the U.S. population doesn’t have a will. Many people think drafting a will is too complicated or only for the super-rich. This is a big mistake.
Even if you don’t have a large estate, a will makes everything easier for your loved ones – especially if you have children.
Wills contain various instructions for your estate and family after your death. For example, they can state what should happen to your money, assets and belongings.
Without a will, the court will decide what could happen. This can leave estranged family members suddenly with the chance to claim inheritance and risk disputes in the family.
For example, you may have told your brother that he could have your car after you pass away. But without having that in a legally binding document, there is no guarantee he’d actually get it.
A will also gives you the chance to appoint a trusted person as the ‘executor’ of the estate. An executor is in charge of handling the distribution of the estate and without one, someone you don’t trust could be put in charge.
Note: While there are plenty of free DIY will services online, these can overlook crucial areas of estate planning and leave your document open to misinterpretation or invalidation. Always consult a Florida estate planning attorney first.
2. Name a Guardian for Your Minor Children
Even those without a dollar to their name can protect their children through estate planning.
If you are unable to take care of your children in the future (due to death or incapacitation), then they will need a guardian.
A guardian should be a loving and responsible person with whom you could trust your life with. But if you don’t name a guardian in your will, then the courts will select someone instead. That scenario is extremely stressful for surviving children and could see them end up living with people you wouldn’t pick.
In your will, you can appoint a guardian for minor children to protect their future. Ensure you discuss this with the potential guardian beforehand and gain their agreement before signing the will.
There are also financial implications to consider, such as trusts and preferences for raising your children.
3. Speak to an Attorney About Trusts
Trusts are legal documents that can be easily understood by imagining them as acting like locked safes – inside are funds and instructions which can only be accessed by the ‘Trustee’ (who you select in advance).
By establishing a living trust, you can potentially bypass probate to avoid the wasted time, money and stress associated with it.
One of our top 10 estate planning tips is to speak to an attorney about trusts to determine whether they’re right for you.
For example, if you want to leave your children a large inheritance but feel uncomfortable with them receiving too much at once or being directly responsible for assets, then you can use a trust to ensure your child only receives their share of the estate under certain requirements – such as 21st birthday, marriage or any other milestone.
4. Protect Your Assets
Another top 10 estate planning tip for protecting your loved ones is to use ‘asset protection’.
Asset protection is a legal process where you structure the ownership of your assets so that it’s extremely difficult for creditors to collect on them.
Protecting your assets can be extremely important in protecting your wealth for your family. Rather than having a creditor take value from your years of hard work, you can keep that wealth in the family.
There are numerous techniques for protecting assets such as real estate, life insurance and personal property.
Techniques include using LLCs, Limited partnerships, joint ventures, marriage, domestic partnerships and more.
Asset protection is complex, so it should always be assisted by an experienced Florida estate planning attorney.
Read our Asset Protection in Florida guide here.
5. Plan Advance Directives
An advance directive is a document that states and upholds your medical preferences in a scenario where you’re unable to make them yourself. They cover a range of health decisions, from treatment preferences to organ donation.
How does this protect your loved ones? By reducing the emotional burden and trauma that can come with critical medical decisions.
By having a plan in place for your choices, your loved ones won’t have to worry as much about what you would like to happen.
By appointing a health care proxy (also called a medical power of attorney), you can also remove the possibility of responsibility being placed on a family member who would rather not be in control.
Advance directives must be witnessed by two people upon signing and having a Florida estate planning attorney’s assistance in drafting is highly advised.
6. Create a Financial Power of Attorney
Another top 10 estate planning tip is to authorize someone to handle financial matters on your behalf.
Much like a health care proxy, this can protect your loved ones in any scenario where you are incapacitated.
Rather than have your finances inaccessible or a burden for your family, your selected individual can sign documents and manage your wealth to protect your loved ones.
This tip is a relatively inexpensive one that most Florida estate planning attorneys will be happy to help with.
7. Ensure You Have Enough Life Insurance
If you pass away, your family will need life insurance to cover the lost income. Make sure you have a policy that will protect your children and loved ones by speaking to a financial planner to find the right coverage. Generally, having life insurance equal to 10 times your annual salary is advised.
8. Update Your Beneficiaries
Even if you’ve done the majority of the above, you should still update your estate planning documents from time to time. A good time to update is after the birth of a new child, divorce or another significant family or life event.
Beneficiaries on 401(k), insurance policies, investments and retirement accounts override those listed in the will, so ensure your plans all line up as intended.
The last thing you want is your loved ones fighting over who gets what. This could also lead to tax and legal issues.
We’ve even seen people forget that they once named their ex-boyfriend from when they were 25 as a 401(k) beneficiary and not remember until decades later.
9. Consider a Pet Trust
An often overlooked estate planning tip is protecting your pet. Pets are usually an integral part of the family. Having a pet struggle after your death can bring a lot of pain to your family.
Pet trusts can allow you to ensure your pet has its own funds to protect them. These funds will ensure your pet is financed for food, veterinary bills, grooming, travel and much more.
You can also appoint someone to manage the pet trust on the pet’s behalf. Pet trusts are legally binding and can ensure that your loved ones always have enough money to look after their favorite animal.
Did you know that each year between 5 and 7 million pets enter animal shelters after the death of their owners?
10. Get Organized
Our final top 10 estate planning tip is to be organized! If you don’t know where your estate planning documents are, then it’s likely your loved ones don’t either.
If you pass away and your will, tax returns, 401(k) and mortgage documents can’t be found, then chaos will begin.
Make a list of the location of each item and provide instructions on how to access the location to your closest family members.
Make copies of your will and provide one to your Florida estate planning lawyer and loved ones. You can also create virtual copies online, which can protect you in case of natural disasters or fires.
Contact a Florida Estate Planning Attorney
If you need any assistance with any area of estate planning or any of our top estate planning tips, then contact our Florida estate planning attorneys today.
Our Florida estate planning attorneys regularly help families and parents protect their wealth in various ways, from inexpensive will drafting to complex asset protection.
Battaglia, Ross, Dicus & McQuaid, P.A. is a U.S. News and World Reports Tier 1 law firm in Florida, specializing in Estate Planning & Probate since 1958. With award-winning experienced attorneys, they can help you get started with estate planning or amend existing documents.
Schedule a free consultation today to get started or to get any questions answered.