Estate planning is the act of preparing your assets in case of incapacitation or death. Although most people are aware of a Will, estate planning goes one step further. Typically an estate plan includes which assets will go to which heirs, as well as instructions for the settlement of estate taxes.
Most estate plans in Delaware will be set up by an attorney, to ensure that the assets will be transferred according to the preferences outlined. Typically an estate plan is chosen for large estates, or for individuals who have a large number of beneficiaries.
Why Would You Need an Estate Plan in Delaware?
Arrival of Children
Protecting your decision is one of the most important decisions that you can make. Whether that is who their guardians will be should you pass away suddenly, or to ensure their security of your estate. These are very important matters that can be managed in an estate plan.
Because probate proceedings are public, it means that all of your assets will be completely revealed to the public. In addition to everything you own becoming public, the person (or persons) who receive your assets will be made public as well. Estate plans help you to avoid this.
Avoidance of Probate
The probate process is what occurs after your death. Often this process can cost several percent of an estate’s value. It is always best to avoid probate, and an estate plan allows you to do that. Not only will it provide significant savings, but it will also help you avoid loss of time and privacy.
If you have plans for your money after you die, then an estate plan can ensure the causes you care for are taken care of.
How Delaware Estate Planning Works
In order to begin estate planning, there are specific steps involved. You must follow these steps exactly in order to execute a reliable estate plan.
Make a Will
Delaware residents should begin by making a will. Your will should include who you want to inherit your property. It can also include who the guardians would be for your children in case of the untimely death of both you and the other parent.
Create a Trust
Living trusts allow you to place your property in a safe location after your passing. Your beneficiaries will not need to go through probate court in order to obtain these assets. This helps them to avoid a long and costly process.
Make Health Care Arrangement
If you become unable to make conscious decisions for yourself, it can be terrible for your family. Especially if you have certain wishes that you would like upheld. In this case, you can create a health care declaration, which includes a living will and a power of attorney for health care. This allows you to give one person the power to make decisions if you are unable to.
Name a Financial Power of Attorney
When it comes to finances, there is nothing that can tear apart a family like death. By naming an individual as the power of attorney, you give them the authority to handle your finances should you become unable to. This person will be required to manage your assets and make decisions on your behalf.
Organize Your Documents
Throughout your life, you should store all important documents in one location. This should be accessible to the executor of your estate, and should include:
- Insurance information
- Property deeds
- Certificates for stocks, bonds, annuities
- How to access assets
- Proof of retirement plans, 401(k) accounts, or IRAs
- Debt information
- Final arrangements instructions
Name an Adult to Protect Your Beneficiaries’ Assets
If you have minor children, you will want to ensure that they will eventually receive their inheritance. This includes property and monetary instruments. Typically you will need to name an adult who can manage these assets until your children come of age. This adult can be the same person who you name as a legal guardian in your will.
File Beneficiary Forms
In order to name any type of beneficiary, you will need to file a legal record of it. In Delaware, you can legally have stocks, bonds, and brokerage accounts transferred to your beneficiary upon your death. This means you must name a beneficiary for all of these assets to ensure they are paid upon your death.
Consider Life Insurance
Whether you own a house with a mortgage, own any type of property, owe significant debts, or even if you have young children, life insurance is a good idea. Life insurance can prevent your family from owing estate tax, or being required to pay off your debts when you die.
Cover Funeral Expenses
If you have specific funeral arrangements that you hope to be upheld (and do not want your family to owe a large sum upon your death) you have options. Specifically, a payable-on-death account with deposited funds can help to pay for your funeral and related expenses.
Make Final Arrangements
There are a variety of final arrangements you should make within your estate plan. This includes end-of-life wishes such as:
- Organ and body donation
- Disposition of your body
- Business protection, including a succession plan or buyout agreement if you have business partners.
Benefit of Delaware Estate Planning
One of the most important advantages of an estate plan is that it protects your beneficiaries. Rather than leave everything up in the air and as a huge burden, estate planning makes a difficult situation, much easier. Your family will most likely be grieving during your death. Forcing them to figure out arrangements and finances can make it much harder.
Your estate plan can prevent the amount of money that is taken in taxes after your death. Certain plans are able to push more tax-free money to your heirs rather than wasting it on taxes.
Estate planning not only reduces the tax burden on beneficiaries but also provides a clear picture of how your assets are to be distributed. Although it is a sad thought, fighting amongst beneficiaries is all too common. Putting an estate plan into place helps to avoid fighting amongst your family over money and assets.
How Much Does an Estate Plan Cost?
An estate plan is extremely important if you are hoping to make your death easier for the people you love, but there are some costs associated with an estate plan. You will need to pay a lawyer startup fees for their time. This should include your initial consultation, the reviewing of your existing estate planning documents, and the drafting of documents.
On average, estate planning start-up fees range from a starting point of $350 to $1,500. If you have minors involved or require a more complicated Will for other reasons, the cost of estate planning can become more expensive.
Do You Need an Estate Plan in Delaware?
An estate plan can be helpful when it comes to protecting your family, but not everyone needs estate planning. You may benefit from estate planning if you are part of a blended family. This means that you may have assets that you wish to go to a biological child (or to protect those assets for that child) in case your spouse remarries down the road.
Additionally, if you have a beneficiary who is disabled, you may want to set up a trust rather than an estate plan. This will ensure that your beneficiary will be able to qualify for public assistance if needed.
Estate plans aren’t for everyone. Some people simply do not need the detail that is involved in an estate plan. If you do not have debt, have only one partner and adult children, then a will may be enough. Contact a lawyer to decide which is best for you.