Often the key to comprehensive estate planning is knowing where the function of one document ends and another begins. For example, what can a trust do as opposed to a will? You can have both, but what are their specific functions?
And what about life insurance and retirement accounts? Those are separate documents, so how do they fit into the big estate planning picture? Dallas-area residents who want to protect their loved ones from probate headaches may want to meet with an attorney to coordinate these matters to the best effect.
First of all, it is important to know exactly what a will can and cannot do. A will is a primary estate planning instrument that clarifies who is meant to receive money and other assets after the estate owner's death.
The will can be thought of as a general estate planning instrument that everyone should have. Without a will, the distribution of the estate will be handled in accordance with state law, and leaving these matters up to the state can cause problems among family members.
So, rule number one: draft a will.
Another concern is tax liability, which a will does not address. This is where establishing a trust might be a good idea. If you place assets in a trust, you can protect its beneficiaries from tax burdens. There are different kinds of trusts, so it is a good idea to meet with an estate planning attorney to figure out which kind of trust is best for your situation.
Then there is the matter of retirement accounts and life insurance policies. These documents supersede a will, so it is essential that the named beneficiaries correspond with the account- or policy-holder's wishes. Absent the names of beneficiaries, the probate court will refer to state law or the will.
The main thing to remember is that solid planning will protect you and your loved ones from unwanted surprises in the future, and a proper array of estate planning instruments can help ensure that protection.
Source: Fox Business, "Documents that Should be Part of Everyone's Estate Plans," Andrea Murad, Sept. 4, 2013