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If you and your spouse don’t have kids, you might not be thinking about working with an estate planning attorney in Orange County. But while many estate plans are geared towards passing assets on to our children, the simple truth is this: estate plans ultimately assure that our assets go where we want them to go. You may go through a different planning process than if you had children, but you can protect your financial legacy nonetheless.
Here is what you need to know about planning your estate when you don’t have heirs:
Why You Need an Estate Plan
One crucial thing to understand is that having a complete estate plan is vital: regardless of whether or not you have children. This truth exists whether you are single, married, have a large estate, or even if you believe you don’t have a great deal to pass on to others.
Without an estate plan, those you leave behind can spend their lives and fortunes battling over your assets. If there aren’t people fighting over your estate, it’s simply divided up by a probate court. Regardless of what happens, not having an estate plan means your financial legacy will be left in the hands of others.
A proper estate plan can also help your beneficiaries make the most of their inheritance: from avoiding taxes to alleviating delays. That’s why it’s also essential to work with an Orange County estate planning lawyer to create your plan. Making a simple mistake can invalidate your entire plan or cause additional issues. To ensure that you have peace of mind regarding your assets, make sure to work with an experienced estate planning attorney.
You Need a Will
In most states, your assets go to your spouse after you pass. If both parents pass at the same time, assets automatically go to their children. If you don’t have children, it is even more critical that you have a proper will.
Without a will, a state probate court decides what happens with your assets. Sadly, the state doesn’t know if you’d prefer to leave certain things to a close friend or your favorite charity.
A will is essentially a document where you can name beneficiaries to your estate. You can give everything to a single person or divide it up among different people and organizations. You and your partner should discuss how your estate will be divided so that you’re on the same page moving forward.
Create Power of Attorneys
Your power of attorney (POA) is someone who can make decisions on your behalf in case you and your spouse become incapacitated. Your estate planning attorney can help you set up the appropriate POA documents to name the right person for the job.
While this person will have a sacred duty to act in your best interests, they are also free to make a variety of decisions on their own. You will want to select someone you trust and truly understands your wishes.
There are four main types of POAs. You can choose one person to handle all of these roles, or divide the position among three different people. You can and should also name backups in case your first choice isn’t available.
- Durable POA. Your durable POA can handle specific areas that you determine: banking, investments, real estate, etc. This kind of POA goes into effect the moment you sign it.
- Springing POA. A springing POA is similar to a durable POA. You can name specific areas that this person can manage on your behalf. The most significant difference is that a POA clearly marked as springing only goes into effect at the time you decide.
- General POA. A general POA goes into effect the moment it is signed. You can change it at any time. A general POA typically ends if you become incapacitated.
- Healthcare POA. Your healthcare POA can actually be a durable, springing, or general POA. This POA is specifically meant to make decisions regarding your care. This is the person that can choose to create a DNR (Do Not Resuscitate) and make other decisions when you’re not able to do so for yourself.
Update Your Beneficiaries
While you may already have a will that determines who gets what assets, you also have to consider other kinds of beneficiaries for life insurance, retirement accounts, and more. If you have someone listed as a beneficiary on your will and someone else listed on a life insurance account, the latter will trump the former in where those assets go.
Don’t make the mistake of thinking your will can cover everything. It’s essential to evaluate your named beneficiaries every once in a while. In some cases, you might have even named a beneficiary before getting married. This can cause significant issues down the road.
Consider Charity, But Do It Right
You may decide to leave your assets to organizations or charities that mean something to you. You might consider your high school or college alma maters, a religious organization, or a non-profit. While you can simply name the charity in your will, you can make the most of your donation by structuring it through the right channel.
There are several types of trusts that you can create that will help make sure all of your assets make it exactly where you want them. One of the most popular options is a charitable remainder trust: You place assets into the trust and can still live off of them.
When you pass on, the trust is transferred to the charity of your choice. Another option is a lead trust. This is when the charity can use any income the trust generates until your death. The trust is then given to whomever you name in your will.
Charitable donations can get especially complicated if you want to spread your gifts to multiple places. Even if you want everything to go to a single charity, there are various ways to structure the gift. Make sure you meet with an Orange County estate planning attorney to get all of the details correct.
You Need an Estate Plan
A life without children has its ups and downs. You may have more money to spend on yourselves, but have a different estate planning process than your friends with children. But just because you don’t have children doesn’t mean you don’t need an estate plan. In fact, you may need one even more.
Don’t let a probate court decide how your financial legacy is handled. Meet with an experienced estate planning lawyer in Orange County today.