It’s almost the Fourth of July! Fireworks, steamy barbecues, pool parties and tons of fun are on the table! But, before you start lighting things on fire — especially in the evening, after having treated yourself the entire day to way too many mimosas, margaritas, or beers … — make sure your assets are protected. And we don’t just mean limbs, noses and other precious bodily parts. We mean estate planning. Summer in general is a good time to take care of stuff you might have been too busy to look at during the rest of the year, and reviewing and updating your documents to ensure your assets are protected is never a bad idea. 

Here are some major estate planning tools that you can use to keep your assets safe:

Living Trust 

A living trust is a three-party fiduciary relationship. You are the donor. The person you’re ultimately giving your assets to is the beneficiary, and the third party is known as a trustee. You give nominal title of the assets to your trustee, who then confers the property to the beneficiary at a set time. The living trust is effective immediately and it can be revocable or irrevocable, depending on what you want. 

The reason a living trust is such a powerful way to protect your assets is because it allows you to avoid probate court. Your assets will go directly to the desired recipient. They won’t be taken through court and possibly diverted to pay off debts. 

Power of Attorney 

The power of attorney is a person you choose. This trusted individual will take care of your finances in the event that you become too sick or incapacitated to take care of them yourself. The POA handles important decisions for you regarding your assets, and he or she handles them during a very vulnerable time in your life. For that reason, you should give a lot of thought to the person you choose, as they will be protecting your assets when you aren’t able to do so yourself.

Living Will

The living will is similar to a POA in that it takes place when you’re too sick or incapacitated to make your own decisions. The living will is a directive that tells hospitals and doctors what you want done in terms of medical decisions. When you can’t take charge of your own healthcare in the moment, there will still be a way for you to have a say in what happens to you.

Business Plan 

Estate planning is particularly important for business owners. Business owners should have a succession plan in their estate planning toolkit or a directive on the sale of the business after they pass away. Updating partnership agreements and reviewing documents pertaining to the life of the business after you, the owner, dies is vital to ensuring the growth of the business and financial wellbeing of your family. 

Guardianship 

If something happens to you and you have minor children, who will be their guardian? Guardianship is an important tool to have in your estate plan because it gives you peace of mind that your children will be taken care of even if you’re not around. Having guardianship documents is always a good idea for anyone with minor children.

These are just some of the many ways you can protect your assets. So, before you start lighting fireworks and firing up the grill, make sure that you have taken care of your estate planning needs. After that, Happy Fourth!

Independence Day is coming up soon, and you’re probably already thinking of ways in which you can celebrate one of America’s most fun holidays. In between all the red, white, and blue, remember that the idea of independence can stretch across all kinds of areas, including those that you hold most dear. Have you thought about your future lately? And not just what you’re going to do tomorrow, or even weeks from now, but the future that will go on after you pass away. 

Estate planning helps you prepare for such a future. It ensures that you’re able to spare your family the tedium and expensiveness of probate court via tools such as living trusts, gifts, and documents that will help keep your estate out of the legal system. In this article, we’ll talk about why your estate needs its “independence” from probate court. 

What is probate court? 

After you die, the world is left with your estate, which includes, among many things, your assets and debts. Your asset need to be distributed, as do your debts. Probate court is a special area of the legal system in which a judge uses your assets to pay off your debts, and then assigns whatever is left to your relatives. It’s basically the management and distribution of your estate using the legal process. Someone in your family is assigned the position of executor, and it is his or her job to oversee the winding down of the estate. 

The Costs of Probate Court

Probate court can take at least a year, and there’s absolutely no guarantee that you’ll be able to have your assets distributed the way you want. There’s also no guarantee that your debts will be paid off in a manner you find appropriate for your family’s financial situation. The judge’s first goal is to get the creditors and IRS paid. Your loved ones come second to debtors and tax collectors. 

While your estate is tied up (the more complicated the estate, the longer it’ll take), your family won’t have access to your assets. If they need money to pay bills, they are out of luck for the duration of the court process. Probate court requires a judge’s approval for basically every little thing. If your family goes through probate, a judge will run interference throughout the whole process, which will make the whole estate windup very protracted. 

There’s also the expense of a legal proceeding. Filing fees can be several hundred dollars. While these fees come out of the assets of your estate, that’s still giving money to the courts that could have gone to something your family really needed. 

Zero Privacy

Lastly, probate is not a private process. Probate court records are a public matter, and information about your liabilities, assets, representatives, and beneficiaries are all out there for the public to see. If someone wants to know something about you, they can read the probate file easily to find out, whether they do it by asking a county clerk (who is unlikely to care why the person wants to read your file) or by going online. Avoiding probate means that your family gets privacy. 

Estate planning tools are there to help your family avoid the tedium, expense, and lack of privacy that comes with probate court. There are legal mechanisms that can give your family immediate access to your assets without requiring them to pass through court. Consult a planner today to make sure you’re getting your own “Independence Day” from costly and time-consuming legal processes. 

When you think of estate planning, you might picture in your head a last will and testament from someone who’s ninety years old. That, however, is not the case at all (though certainly that is a common document and age range). Estate planning is a young man’s game too, and college kids need a power of attorney the same way someone five decades their senior does.

You should encourage the college-age kids in your life to get a power of attorney. In this article, we’ll discuss what a power of attorney is, as well as why college-age people should have one.

What is a Power of Attorney? 

If you become unable to manage your own affairs due to incapacitation (illness, injury, mental incompetence, etc.), a power of attorney is the person you legally appoint to manage your affairs in your place. Even if you have absolutely no problems on the horizon and are in perfect health, you still should have a power of attorney. There are a few different types of power of attorney. These include general, special, and healthcare. You should also know the term “durable power of attorney.” 

General power of attorney gives a person broad authority to act on your behalf for a wide range of different issues. This type of POA is included in an estate plan most often. The special power of attorney is narrower in scope, and you assign to the special POA only those powers you wish them to have. A healthcare POA makes healthcare decisions for you if you’re too sick or injured to make them. 

Lastly, a durable POA is just a document ensuring that there won’t be any issues in keeping the authority of the general, special, or healthcare power of attorney intact in the event that you’re too incapacitated to make your own decisions. The durable power of attorney can also go into effect if you’re mentally incompetent to handle decision-making, and you can choose the doctor(s) you want to determine your competency to lift the POA. 

Why do college kids need one? 

Estate planning is based on the fact that no one is infallible. It is the best way to prepare for the “what ifs” in life, and college kids are still vulnerable to different types of illnesses and injuries. They certainly aren’t injury- and sickness-proof while they’re away from home. Having a college-age kid sign a power of attorney ensures that kid’s parents will be able to manage their affairs, should the kids become unable to do so. As the kids are 18 and no longer minors, they can pick any adult they trust, related or unrelated. College kids don’t have many assets, but they do have bills, a bank account, and digital accounts that need to be managed if something happens. 

Kids who are in college rarely think anything can happen to them, but, unfortunately, that isn’t always the case. It’s important to be prepared, and having a power of attorney is a necessity for anyone who is no longer a minor.

Father’s Day has just passed, and you’ve probably either given or received some pretty great gifts. If you’re a dad, or someone related to a dad, you should know that the spirit of celebration doesn’t have to end just because the holiday is over. There is still a great gift you can give someone in your life, whether you’re giving the gift as a father or to a father. This is the gift of estate planning. Estate planning is the process of arranging and assigning the way in which your assets and debts will be distributed after you pass on. 

Without an estate plan, your family could be looking at some time (and money) spent in probate court trying to figure out what to do. To spare them that tediousness, below are some common estate planning documents you should know.

529 Plan 

     A 529 plan is a tax plan that allows you to set aside some of your assets for the kids in your family who will be going to college. This plan is also called a “qualified tuition plan.” The qualified tuition plan can be sponsored by states, state agencies, or state institutions, and it comes with tax advantages. The 529 plan can operate as a savings account designed to accrue federal and state tax benefits (income tax breaks, low maintenance, simple reporting, control of the account, and more). The impact on financial aid is minimal.

As an alternative to a savings plan, you can have a prepaid plan, which will pre-pay tuition for colleges, either in full or in part. These 529 plans are generally fine to use for out-of-state colleges, but you should check with your estate planner to ensure that they are usable.

Living Trust 

    A living trust is different from a last will and testament. The living trust has three parties: (1) you, the donor, (2) the trustee, and (3) your beneficiary. You give nominal title to the trustee, who passes the title of the asset to the beneficiary after you pass away (or whenever you decide you want your beneficiary to have it). You don’t have to go through probate court with a living trust the way you do with a last will, as a living trust goes into effect immediately. Depending on the trust, it can be revocable or irrevocable. 

Guardianship 

     Naturally, a Father’s Day post couldn’t go by without mentioning the kids who have made you a father. An important part of estate planning for those with minor children is deciding who will have guardianship of them in the event that something happens to you. Keep the guardianship plan updated if there are any changes (for example, if the person you would have chosen can no longer take the kids, make sure you immediately change your estate plan to reflect that). Having someone you trust as a guardian will give you peace of mind and benefit your kids immensely should something happen.

These are just some of the many documents that go into estate planning, and there are tons of other tools in the toolbox that will be right for your particular financial situation. Consult with an estate planner today to keep the Father’s Day gift-giving going. 

            Most of us have probably had a sunburn. Those of us with easily-sunburned skin know the stinging pain that comes along with it. Though our beach day might have been fun, the aftermath was not quite so nice. However, sunburns aren’t the only thing that can cause a major sting. Think of probate court as the judicial equivalent of a sunburn: annoying, uncomfortable, and definitely not what you want to be dealing with. Here’s a brief overview of what probate is, how you get there, and how you can avoid it.

What’s Probate?

            Probate court is a court that deals with the division of your assets and repayment of your debts after you die. It handles validation of a will, identifying and taking an inventory of the deceased person’s property, and dividing said property up according to state law (after debt repayment, of course). State by state, the process of probate court varies, but here are some elements of the process that you need to know, and they don’t vary a whole lot across-the-board.

First, you should know about the executor. This person can be named in your will. Or, a judge can appoint him or her if you die intestate or fail to name the person. The executor has a lot to handle. He or she validates your will, presents a judge with an inventory of property and debts, and gives a list of who should inherit the property and assets that you’ll have left after the debts are wiped out.

The executor notifies your creditors and family members of your death so that people can make requests. The executor has to decide what to do if you come up short. If you’ve granted cash gifts that you don’t have when you die, the executor might decide to sell some of your property in order to make ends meet. This is just one example of the way in which the executor will work with the court to settle up your property. This process usually takes a year or two, but it can take even more, depending on your circumstance and the court’s schedule. Overall, probate is a long, arduous ordeal.

How Do I Wind Up There?

            If you die intestate (which means being deceased without a will), you’ll end up in probate. People might be under the impression that you can avoid probate if you have a last will and testament, but that actually isn’t true. The executor still has to go to court and validate the will. A will must be authenticated. Otherwise, it isn’t going to hold up in court. Lawyers will assist in the validation process, as it varies based on state law.

            Having an estate plan that doesn’t address important documents recommended if you want to avoid probate is a way that you wind up there. Especially when it comes to the appointment of your executor, your family will not like the process at all. If the judge appoints someone you didn’t intend to manage your affairs, things will go likely downhill rapidly.  

Yikes! How Can I Avoid That?

            Avoiding probate court involves some legal footwork, such as establishing a living trust. This legal tool is a three-party fiduciary relationship that is effective immediately. You, the donor, give nominal title to the trustee, who then confers the title to your beneficiary when you designate them to do so (i.e. after you die, usually). Joint tenancy arrangements are also not subject to probate, depending on state law. Your estate planning attorney will help you work out ways to keep your family out of probate.

            When it comes to this judicial sunburn, you want to take all the necessary precautions. Consider a living trust (as well as smart estate planning overall) your equivalent of SPF 50 sunscreen. Good estate planning and consulting with an estate planner will save your family time, energy, and stress. A sunburn might last just a week or so, but the sting of probate lasts way, way longer.