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Horizon Elder Law & Estate Planning Blog

Thursday, May 27, 2021

Estate Planning Tips to Keep Your Money in the Family

The last thing that most people want is for their loved ones to get shortchanged because your estate had to pay avoidable expenses or taxes after you died. Every dollar that your estate has to pay in taxes or costs is a dollar that your family will never get.

There are many ways to set up your estate to minimize and sometimes entirely avoid these things that waste the money that you worked a lifetime to earn. A California estate planning attorney can talk with you about your situation and craft an estate plan tailored to your needs and goals.

Having a Will or Trust Keeps More of Your Money in the Family

When a person dies intestate, meaning that he did not have a valid will or trust document, the estate has to go through probate court in an intestacy proceeding. Going through intestacy is more expensive than an estate with a will or trust because intestacy generates additional expenses. Your estate has to foot the bill for these costs, so less money will go to your heirs. By having a will or trust, your estate can go through the administration process more smoothly and at less cost than intestacy.

Transferring Assets Outside of the Estate Gets More Money to Your Loved Ones

The amount of taxes your estate has to pay will depend on the total value of your estate. You can take steps while alive to help some assets sidestep estate administration and not “count” toward your estate’s total value.

Naming specific beneficiaries on your life insurance policies allows the insurer to pay the death benefits directly to those people or organizations instead of to your estate. You can title your bank accounts, like checking and savings accounts, as “payable on death (POD)” or “transfer on death (TOD)” to let those assets bypass your estate and go immediately to the people you designate. You can do the same with brokerage and retirement accounts.

A Trust Can Deal with Specific Situations and Keep Your Money in the Family

There are many different kinds of living trusts that deal with particular situations. Some of these specialized trusts, like Medicaid trusts, can save money while you are still alive, keeping money in the family. For example, a Medicaid trust can help to pay for long-term care expenses and preserve assets and income for the spouse who does not live in the nursing home.

Several types of trusts can reduce taxes for the surviving spouse and other beneficiaries. Paying less money to the government means that more money is available for your loved ones.

Keep Your Documents Updated

You should review your will and trust every year or so to make sure that they are still current. Also, you should take a look at your beneficiary designation on things like life insurance and other accounts and your TOD or POD assets.

Some life events can automatically invalidate a will or give rise to a will contest. When you get married or divorced, you need to update your estate planning documents. Also, when you or your spouse give birth or adopt a child, your will and trust need to be revised. If you do not keep these documents current, your estate might become intestate or have to pay increased expenses, leaving less for your family.

A California estate planning attorney can explain your options for ways to keep your money in the family. Contact our office today.


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