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Fullerton Estate Planning Law Blog

What if you forget to put assets into a trust?

You set up a trust to transfer your assets on to your children when you pass away. You put some of your assets into the trust at the time. However, you do not pass away for another 10 years. In that time, you gain more assets that you forget to add to the trust. You never update it. Now, what happens to those assets?

Typically, the assets then have to go through probate. They'll still pass on to your heirs, but they may lose some money in taxes, and it can take time. It all depends on the specifics of your estate. But do not assume that all assets end up in your trust. No matter what you intended, the courts don't take this step for you. It's up to you to do it in advance.

Picking a guardian under the threat of divorce

You decide to do your estate planning, and your assets are actually not your main concern. You want to get things set up for your children, who are still minors. As such, your first order of business is to pick guardians for the kids.

When many people arrive at this point in their lives, they pick another couple. That couple may or may not have children of their own, but they are still a married couple who can take the child in and raise them as part of their family.

Do you need a new will or a codicil?

You made a will last year. Now you want to update it and make some changes. Do you need to make a completely new will?

You may, but another option is to use a codicil. This official document can essentially amend the legal plan you already have in place. It leaves most of the will untouched but can lay out which specific changes you want to make.

Estate issues and children who haven't stayed in touch

After a parent passes away, it can be hard for adult children to work together and get everything figured out. It's a complicated process. Like all things involving money, it can lead to heated disputes. There are many potential problems that can arise.

The odds of a serious issue grow even higher when the children have not kept in touch at all. Imagine that you moved out at 18 and went to college. You still talked to your parents, but that was the last time you really spoke to a younger sibling. You rarely came home for breaks. They went to college the next year. You both started families and even lived in different states or countries. You got information second-hand, through your parents, but you didn't talk to each other.

What if you don't sign your will?

You know that most people don't have a will, and you set out to change that at least for your family. You draft a will, decide who should get your major assets, talk to your heirs about what they want, and then put the will in your desk.

However, you never actually get around to signing it. If you pass away -- perhaps unexpectedly -- and they find that will when they go through your things, is it going to hold up?

A trust fund gives your heirs serious advantages

Done the right way, a trust fund can give your heirs advantages in nearly every area of life. If you have substantial assets to leave them, they may even be able to pass some on to the next generation. You can use your wealth to define their lives and help them avoid common pitfalls that their peers face.

For instance, many young people in the United States face a crisis revolving around student loans. College has gotten to be incredibly expensive. They still feel pressure to go to school, and many young teens think they have no choice but to take out the loans.

Failing to do estate planning harms your family

Don't think about your estate planning as something you just need to do for yourself. Think of it as something that you need to do for your family. After all, they're the ones who are going to see the negative consequences if you do not.

Say that you put off your estate planning, as a lot of people do. Then you either pass away or suffer from some sort of medical incapacitation that makes the planning impossible. For your family, this means:

  • They have to attempt to guess at what you would have wanted
  • It wastes a lot of time and energy
  • They may get into long-lasting disputes if they do not agree on a course of action
  • Your estate could lose a lot during probate
  • They may have to pay more in taxes than they would have with careful planning
  • They have to sort it all out on their own

3 estate planning documents beyond a will

Your estate planning may start with a will, but you may not necessarily want to let it end there. You have many more options. One of the most common is a trust, which allows you to leave money to the trust -- rather than putting it into your will -- and then letting the trust pay out to your heirs.

Estate planning really is flexible. You can create a plan that fits your needs and your family. Besides a will and a trust, here are three different documents you may want to consider:

  • A health care proxy: With this, you choose a trusted person -- usually a family member -- and give them the legal power to make medical decisions for you if you can't do it on your own.
  • A living will: In this document, you simply list your desires about medical treatments, which are typically used to intervene in a life-threatening situation. For instance, you may say that you do not want to be kept on life support or that you do want to be resuscitated if possible.
  • A power of attorney: Outside of medical decisions, you may have legal and financial decisions that have to be made if you are incapacitated. With a power of attorney, you give someone else the authority to take these actions on your behalf so that they can do things like access your bank account, pay your medical bills or pay your taxes.

How much do most people have when they retire?

Considering the net value of your assets -- and your debts -- is a good place to begin if you are looking into your estate planning options. To know how to pass that wealth on effectively, you need to know exactly how much you have. People often underestimate or overestimate their wealth, so it's crucial to take stock of everything.

Average wealth at retirement

Do your heirs owe your mortgage after you pass away?

As you write your will and attempt to decide what to do with your family home, you realize that you could still have an outstanding mortgage loan when you pass away. In an ideal world, you'll pay it all off first, but you never know what the future holds.

If you pass away and the loan still exists, are your heirs obligated to pay it? After all, they had no say in accepting or taking out the loan in the first place.

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