What is Estate Planning and Why Is It Important?
Estate Planning is simply making decisions now – while you can – before you can’t about who controls and benefits from your assets, both during life and after we pass on. Estate Planning isn’t just about what happens when we die. It’s very much about the here and now to make sure we stay in control, don’t outlive our money, or become a burden on anyone.
Remember the joke about the man who asked to be buried with all his money, so his wife deposited all his money in her own bank account and then buried him with a check? This guy needed a better estate plan. So what is estate planning? It’s planning for the control and distribution of the assets of a deceased person – because you can’t take it with you when you die!
However, estate planning isn’t just about what happens when we die. It’s also very much about planning for the here and now to make sure we stay in control, don’t run out of money, and don’t become a burden on anyone if we become incapacitated, whether temporarily or permanently.
Fortunately, the good news is that estate planning is both easy and affordable. The hardest part is just showing up!
Read along to learn more about estate planning and a few easy you can take to create your own estate plan.
- Understanding Estate Planning in Louisiana
- How Much Does Estate Planning Cost?
- What is Estate Planning and Why Do You Need It?
- What is an Estate Plan and the Steps to Prepare It
Understanding Estate Planning in Louisiana
What is estate planning? Estate planning deals with managing and distributing an individual’s assets during life and after death. However, it isn’t only about managing one’s finances and properties; there’s a lot more to it. Some goals of estate planning might include:
- Establishing Durable Powers of Attorney for financial and medical decisions during life so you stay in control
- Executing a Healthcare Directive (also known as a “Living Will”) to govern end-of-life decisions
- Creating a Will or Living Trust to determine who is in control and who gets to benefit from assets at death
- Minimizing inheritance and income taxes
- Appointing an executor or trustee to oversee the administration of the estate
- Updating the terms and conditions of insurance policies, annuities, and retirement plans
- Establishing a guardian or tutor for living dependents
Now that you have a better understanding of some basic goals of estate planning, let’s delve into some particulars.
How Much Does Estate Planning Cost?
Estate planning costs vary widely depending on the complexity of the estate and the method of preparation of your estate plan. Attorney-prepared documents are generally more expensive than online estate planning with Geauxplans.
To learn more about the cost of a Will or a Trust, click the buttons below.
What is Estate Planning and Why Do You Need It?
When it comes to estate planning, you have two options: 1. Do Something, or 2. Do Nothing. If you want to make your own decisions about who should control your assets, who gets to benefit, and when, then you must do “something” and not “nothing.” If you do nothing, you are opting for the “government’s estate plan” where the government will determine who is in control of you and your assets, who gets to benefit, and when.
If you want to protect everything you own and everyone you love, you must do “something.” So what is estate planning? It’s simply doing what we all must do – “something” to protect our loved ones from the consequences of doing nothing.
Incapacity and death will arrive without warning, so here’s why estate planning is critically important and something you should never overlook:
Everyone has an estate that needs to be distributed after death. This disposition of these assets is not always governed by a Last Will and Testament or Living Trust. Some assets are governed by beneficiary designation, like life insurance, annuities, and retirement plans. These assets are often referred to as “non-probate assets.”
Proper estate planning requires that you review the beneficiary designations of any non-probate assets to ensure your wishes are consistent with the provisions of your Will or Living Trust.
What is estate planning? It necessarily includes the integration of the beneficiary designations of any non-probate assets with your estate planning documents to ensure your intended beneficiaries get the benefit of your estate.
Intestate Laws (the Government’s Estate Plan)
Procrastination is the silent killer of estate plans. If you die without a will, your estate will be subjected to the intestate rules. It means that the State of Louisiana (or your state of domicile) will decide who is in control of your estate, who gets to benefit, and when. The failure to plan usually has unintended consequences that place your family and loved ones in a difficult position.
Louisiana intestate laws are rigid and unfavorable. Some of the general default rules are as follows:
- Separate property (possibly the marital home) completely bypasses a surviving spouse
- A surviving spouse does not have full control over community property, which gives children leverage over a surviving spouse
- A spouse cannot sell property without consent of children
- A surviving spouse is entitled to a “marital portion” in Louisiana, which can result in litigation absent proper planning
- Reimbursement claims from or against a surviving spouse must be resolved without proper planning
- A court will select an executor and determine who controls the estate
- A court-appointed executor is entitled to 2.5% of the value of the estate as compensation, which often results in a race to the courthouse to get appointed (payday!)
- Disagreements about the character of property can spark litigation
- Questions about parentage or unknown heirship can arise, which can result in challenges
- Forced heirship claims are possible in Louisiana
- A minor child’s surviving parent will control their assets, who could be an untrustworthy in-law
- A child or surviving spouse with special needs may lose governmental benefits without proper estate planning
- And much more…
It’s easy to avoid these default rules by simply preparing your own estate plan. GeauxPlans makes estate planning both easy and affordable.
Planning for Incapacity
Estate planning also allows you to determine who is in control of you and your assets in the event of your incapacity. Incapacity is simply a mental or physical condition that prevents you from acting on your own behalf, whether temporarily or permanently, such as an injury, illness, or degenerative disease.
A proper estate plan including Durable Financial and Medical Powers of Attorney allows you to appoint someone to look after you and your assets while you are incapacitated. Without these documents, the government will determine who is in control, but only after a very expensive court proceeding referred to as an “interdiction” in Louisiana.
What is an Estate Plan and the Steps to Prepare It
Now that you’re aware of the importance of estate planning, let’s help you develop a concrete estate plan in a few simple steps. What is an estate plan really all about? Let’s find out.
1. Identify Assets
What is an estate plan? Start by identifying your key assets, including cars, properties, cash, personal possessions, life insurance accounts, etc. Create a list of all the assets. You may wish to conduct an appraisal process to calculate their value, but this is not necessary for basic estate planning.
2. Advance Healthcare Directive (or “Living Will”)
Execute an Advance Healthcare Directive. An Advance Healthcare Directive (also known as a “Living Will”) governs end-of-life decisions. The purpose of this document is to (i) ensure that your wishes are followed in the event you are connected to artificial life support with no meaningful hope of recovery, (ii) minimize disputes about end-of-life decisions, and (iii) take the burden off of a loved one from having to make the decision because they often feel guilty.
3. Durable Powers of Attorney
Execute a Durable Financial Power of Attorney and a Durable Medical Power of Attorney. A Durable Power of Attorney is a legal document that appoints someone to make financial and medical decisions for you if you are unable to do so for any reason. These documents become critically important in the event of incapacity to avoid an expensive court proceeding.
4. Last Will and Testament or Living Trust
You also need a device to govern the disposition of assets at death, which can be either a Last Will and Testament or a Living Trust. You don’t need both. A Last Will and Testament is a perfectly acceptable choice. However, if avoiding the probate process is a goal, then a Living Trust would be the proper choice.
A Last Will and Testament is basically a gift that becomes effective at death, while a Living Trust is an agreement that is signed during life that establishes rules for how your assets will be managed both during life and distributed after your death.
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5. Review Beneficiaries
To ensure that the deserving person gets a share of your estate, update the designated beneficiaries of your non-probate assets, such as life insurance, annuities, and retirement plans. Your beneficiary designations should be consistent with the provisions of your Last Will and Testament or Living Trust. Furthermore, name contingent beneficiaries to ensure that there are backup beneficiaries in case the primary ones die.
6. Consider Estate Taxes
There can be several types of taxes that may impact your estate. Consider these common death taxes:
- Federal Estate Tax
- State-specific inheritance tax
Although Federal estate tax may be imposed on larger estates, Louisiana doesn’t impose any state-specific tax on the estate. Isn’t that great?
7. Get Help
You can hire an attorney to assist with the preparation of your estate plan. However, you can also prepare your own estate plan online with GeauxPlans, which is Louisiana-specific. GeauxPlans give you the option to meet with an estate planning attorney if you so choose to answer questions about estate planning. So questions about what is estate planning or what is an estate plan can be more fully addressed in this complimentary meeting.
Again, what is estate planning? Estate Planning is simply making decisions now, while you can and before you can’t – because that day is going to come! Failing to plan is planning to fail, which is one of the worst estate planning mistakes you can make. GeauxPlans is an easy and affordable solution that is tailor-made for Louisiana.
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