It is critical that you take the time to create an estate plan while you are of sound mind to do so. Creating such a plan makes it easier to transfer assets to friends, family members and others who you care about. It may also make it easier to make arrangements to care for minor children or pets that may be left behind. What should you think about when making a will?
How Does a Will Impact Transfer of Property After Death?
Without a will, any property that you have may be given equally to a spouse or other family members. If you don't have any family members, your property may simply be left to the state. A will gives you the chance to specify which person gets a certain asset or item that you wish to transfer after your death. However, it is important to note that superannuation funds and other assets such as a life insurance policy may be transferred by making a beneficiary designation on the account.
What Is the Transfer of Property Ownership After Death Process Like?
After you have passed, your estate will likely go through the probate process. This process gives authorities time to read over a will to make sure that it is valid and reflects an individual's true last wishes. If there is any reason to suspect that a person was manipulated into creating a will while not of sound mind, it may be challenged during the probate process.
As contesting a will can delay the amount of time that it takes to settle an estate, it is critical that you construct your will properly. It is also important that you make any corrections or changes to your will in accordance with the law to reduce the odds that anything thinks about contesting a will. Once the will has been declared valid, the executor of the estate can begin transferring property.
If an asset comes with a beneficiary designation, the person who is listed as the beneficiary can generally take ownership of that asset immediately. In most cases, the beneficiary simply needs to prove that the person who previously owned the asset has passed.
Issues to Consider When Making a Will
There are many things to remember when making a will. For instance, you should create it with the help of an attorney because this person will know whether or not you have made mistakes crafting the document or have left anything out. While you may not think that forgetting to designate an executor to your estate is a big deal, it could delay the process of settling your affairs after you pass.
Once you have created a will, make sure that you look it over few years. If you get a divorce, remarry or go through any other major life event, check your estate plan to see how that event may impact it. Doing so may increase the odds that you change the beneficiary on a bank account from a former spouse to your current one or take other actions to better reflect your current wishes.
Ideally, you will want to name alternate executors or beneficiaries. This is because the primary executor may die or otherwise be unavailable to fulfill that role. It is also possible that a beneficiary dies or is no longer a meaningful part of your life when you pass. Having alternates ready to go makes it easier to pass assets without a will challenge.
Don't Forget to Account for Debts and Other Liabilities
As a general rule, creditors are paid first with assets available to an estate. Income taxes must also be paid before beneficiaries get anything. However, you can keep assets away from creditors and achieve better tax outcomes by using a family trust or a discretionary trust. Your attorney or other estate planner advisers can tell you more about whether a trust is an appropriate tool for you.
It is certainly in your best interest to create an estate plan as soon as possible. It may give you greater security in life while giving your heirs greater security after you have passed on. Even if you choose to create your own estate plan documents, make sure to have them reviewed on a regular basis by an attorney.