Most families do not want to have to enter probate after the passing of a loved one because the trauma from the loss is bad enough. To define probate, it happens when the property of your loved one must pass through the court system before it gets distributed. This punishes those left behind, which is why it makes sense to have an estate plan. An estate plan keeps the trauma to a minimum, and you want to keep this process as simple and straightforward as humanly possible. How can you tie in an estate plan with the new home that you bought so that your loved ones will suffer the least? Let’s have a look at how you can go about doing this.
Why You Want Estate Planning
Without estate planning, the property will be vulnerable if any discrepancies arise. For those who do not have estate planning, decisions like medical care, property and final arrangements will be left up to question. In other words, things will happen without your final input.
The division of the home at your death will go according to the hierarchy of the survivors based on state laws. In addition, the execution of the will gets carried out based on the whims of a relative or community customs, and you may not find it favorable to how this happens. That’s why estate planning matters. You want it to match the wishes that you have, rather than it matching someone else’s plans.
The Key Questions to Ask Yourself
Before you tie in your home with your estate plan, you have a few questions that you may want to ask yourself like:
- What assets do I have and what are they valued at?
- Who do I want to give these assets to?
- Will I give them away in my lifetime or at death?
- Who manages these assets in my lifetime?
Once you have asked yourself these questions, the next thing that you will have to do is draw up the legal documents that will protect your decisions made for these estates. You have a few different documents that you want to keep in mind when it comes to this.
Let’s say that you have joint ownership of the home. At your death, the home will automatically pass on to the survivor without question. This type of ownership doesn’t go through probate. This works well for survivors who are spouses, relatives and close friends. You have to always consider someone who won’t take this for granted and squander the property.
Keep in mind, if you don’t have your loved one’s name on the deed for the home, they don’t technically own it, and it could be taken from them. That’s why you may want to consider joint ownership of the property.
What You Need to Know
Most people think of the will when it comes to estate planning. After you have gone out and bought a home, you should have this on your will. A lot of problems arise that can tear apart families without a will. The will directs how the estate gets divided at the person’s time of death. You can use software to draft up a will, or you can pay an attorney to do this. It especially becomes valuable to have an attorney on hand for doing this when you have a bigger estate because they can help you with the proper estate planning and ensure that everything goes according to the most current laws.
Understanding a Will
Getting a deeper understanding of a will matters because of how your home will get redistributed after your death. This represents the estate planning that you have planned. The more intricate your assets, the more you may need to have an estate planning lawyer on hand to help you.
You should understand what the will does and does not cover. A will serves the following purpose:
- To distribute assets in death.
- Who will act as guardian for underage children or managing a property.
- Whether you will cancel debts owed to you in death.
- How you want to pay debts and taxes you might have.
When a Will Won’t Be Enough
If you have bought a home and have assets worth more than $2 million, a will may not be enough because you will also have estate taxes. Another time where it may not be enough is if you still want to maintain control over the property even after death, you may not to have something more than a will. You may want more protection as well if you fear that someone may come in and try to claim the will because your beneficiaries are mentally incompetent or you fear that they could get them to sign under duress.
What All Needs to Be Included in a Will?
Some of the things that you need to include in a will are the name of your personal representative and executor. They will see to the distribution of the home and other assets. You should also name an alternate in case the other person can’t act or doesn’t want to do it. You will also have to name the beneficiaries and specify what will be given and to whom it will be granted. Finally, you will also want to name alternate beneficiaries for the case where the original beneficiaries were also deceased.
A lot of people don’t do this because they expect their beneficiary to live, but you have had cases where the beneficiary passed away. For that reason, you want to have an alternate beneficiary. Nevertheless, if this were to happen, then it will become a part of the deceased beneficiary’s estate, and it will pass on to the next person in this way.
Good estate planning can prevent you from the drudgery of probate. If possible, you don’t want to have to go through probate. Nevertheless, when you need a lawyer, they can serve as a big advantage to navigating the different laws surrounding estate planning and what not. Tying in your home into your estate plan becomes as simple as listing who the beneficiary is. For home and net worth with a higher value, you may find it beneficial to first hire a lawyer for estate planning because this will keep your family from having to go through probate later.
I hope you enjoyed reading: How to Tie in an Estate Plan with a New Home.
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