Planning for your estate is a practical gift that you can leave for your family, heirs and charities.
Here is a short list of some common estate snags that you can avoid with just a little bit of planning.
1. Get a Will.
i)In general, in most jurisdictions dying without a Will means that your estate will be distributed by the courts in a rigidly prescribed manner which neither you nor your survivors have any control over.
Having a Will avoids having your estate being distributed to people you didn't intend to give money to.
ii) Powers of attorney for your financial affairs and health care are very important additional items that you walk out of your lawyers office with when you make out your Will. These may seem like throwaway items at the time but can become extremely important documents that can have a dramatic influence for many years of your life, long before you pass away.
Though not technically an estate snag, having powers of attorney in place avoids giving up control over these important life matters and can often help to avoid potential abuse of your assets while you are alive.
2. Review and update your Will.
Over time things in life change. Births, deaths, preferences, divorce, remarriage and the charities you support are just a few things that should be considered. A rule of thumb is to review your Will at least once every 5 years. Be sure to share any changes with your financial advisor who should be able to help you protect your assets and get the most out of your estate for your heirs.
Like getting a Will in the first place, updating your Will avoids your estate being distributed to people you didn't intend to give your money to.
Thankfully there are exceptions however in general, when you die most of your assets instantly belong to a new legal entity that's referred to as your estate, known as 'the estate of ... '. In most jurisdictions 'the estate of ...' must go through the probate process before it can be distributed. Probate is time consuming and expensive, reducing the value of your estate while your executor has little if any control over it. In general, your estate can't be accessed by your heirs until it clears probate which includes paying probate taxes and legal fees etc.
If your estate is simple, probate can often take six to nine months or more; in more complicated cases it can literally take years. In particular, if you expect that your heirs will quickly need access to your estate assets to pay the bills etc. ask your financial advisor about setting aside money that sidesteps being included in your estate and avoids the probate process entirely.
Avoiding probate where ever practical avoids putting a lot of unnecessary stresses on your survivors and allows 'the estate of....' to flow quickly and smoothly to your intended heirs.