Kentucky – Indiana Estate Planning Attorneys Answer
Frequently Asked Questions
Below are some questions and answers that might help you understand your own estate planning needs. If you have further questions, wish to get started on an estate plan, or want to update an existing estate plan, call our office today. It is important to meet so we can discuss your unique situation and goals.
What is estate planning?
An estate is all the property owned by an individual, including real estate, bank accounts, stocks, securities, life insurance policies, retirement plans, and personal property including autos, jewelry, artwork, etc. Estate planning is the creation of legal documents that articulate the wishes of the owner in case of incapacity or death, and includes the funding and titling of ownership documents of all the assets, in conformance with the estate plan.
Can an existing estate plan be changed?
Yes, in fact, it is advisable to review an estate plan every three to five years to ensure that it reflects the current situation and goals of the owner. As life progresses, things change, and so should an estate plan. However, some estate plans are designed to be irrevocable, and in such a case, the owner intended for no changes to be made to the estate plan, and thus, none can be made.
What are some estate planning mistakes?
Some common estate planning mistakes include not having an estate plan, not updating a will, not planning for disability, placing a child’s name on a deed, naming the wrong person to handle the estate, not utilizing the federal tax exemption, not meeting with experienced legal, financial, and tax professionals. The biggest mistake is waiting, holding off until you get older or build more wealth. People become incapacitated or pass away when they least expect it. Then what?
What about life insurance?
Life insurance is an important aspect of estate planning because it can provide care to a beneficiary when someone becomes incapacitated or passes away. There are many types of life insurance. For an estate planning attorney, it is critically important to make sure that beneficiary designations are in place and match the estate plan. The estate planning attorney works with the financial advisor to make certain the beneficiary designations are current and in place.
How do estate taxes and other taxes figure into an estate plan?
The federal and state government have laws regarding estate taxes and capital gains taxes, should real property be involved. Many states have adopted a Uniform Probate Code. Estate and gift tax are imposed by the U.S. government. There are many tax exemptions, as well. This is why it is important to consult an estate planning attorney and/or a financial advisor when establishing an estate plan.
How does retirement fit into the estate planning picture?
Most people have a significant portion of their assets in a retirement account, pension plan, 401k plan, and/or annuities. And yet, many estate plans do not address these assets. This is a big oversight because an estate plan should include all assets. Improper or outdated beneficiary designations on these accounts can trigger disastrous tax results that could significantly reduce the amount of an inheritance that a beneficiary might receive. Even worse, that hard earned retirement money can go to the wrong person when the beneficiary designation on a retirement account is (delete “are”) not properly set up and updated from time to time to reflect the current situation. For example, an old 401k plan from a previous employer that was established decades ago may designate someone as a beneficiary who has passed away, or in some cases, may be an ex-spouse or someone who is estranged from the family. Those assets may end up passing to someone else, and not to the beneficiary the deceased intended.