If you’re among the 68% of Americans that have not yet drafted a will, it’s important that you begin the process as soon as possible. Life is unpredictable, and planning your estate can offer both peace of mind and added security for your assets. However, wills are just the tip of the iceberg, too. It’s important that you know all the ins and outs of inheritance law so that you can protect your estate. Read on to learn some important things to keep in mind about inheritance laws.
1. The Basics of Inheritance Law
An inheritance is any property that a person acquires through the laws of descent. Inheritance is distributed to previously determined recipients upon the death of the previous owner.
Inheritance law refers to the legalities that go into ensuring that a dedicated recipient receives their due inheritance. The person holding the property must work with inheritance attorneys to draft documents and take necessary steps to ensure that their assets go to the appropriate place. This process is called estate planning.
This means making a will that designates where you want all important assets to go. It also means listing your assets, determining debts and obligations, and providing recipients with relevant account information after your passing.
It also means designating who will implement your will. Usually, you will choose a spouse, adult child, or another close relative. This individual will be the executor of your estate.
2. Most People Have an Estate
When people think of inheritance, they tend to conjure images of rich people accessing fortunes or mansions. While this is true in some cases, it’s far from the norm.
Nearly everyone holds assets in some form. Assets can be the contents of any bank account regardless of its size. They also include property, cars, jewelry, technology, and more.
If something has financial value that could be converted into cash in the present or future, it is an asset.
Anyone who holds assets has an estate. Thus, most people have estates in some form. These estates become inheritances for those in your will.
3. Drafting a Will Is Necessary
Wills are an essential part of any estate plan. They are the primary documents that let courts and executors transfer your assets to beneficiaries upon your death. In a will, you will note:
- Who should execute your estate
- Where each of your assets should go
- Who will take care of any pets
- Designated guardians for minor children
- Designated guardians for other dependants (disabled loved ones, etc)
- What should happen to family businesses
Usually, everything will pass to a spouse unless otherwise stated. If you do not want all of your assets to go to your spouse automatically, state that in your will with the help of an attorney.
A will is critical because it is your voice when you can no longer speak. It’s the best way to provide for the welfare of your loved ones and get assets to the right place. It also eliminates the need for your intended beneficiaries to undergo grueling and lengthy courtroom processes and settlements.
4. You’ll Need to Inventory Your Items
However, estate planning doesn’t stop after you draft a will. You also will need to:
- Create a comprehensive list of assets
- Assemble a list of your debts (loans, mortgages, home equity lines of credit)
- Build a list of memberships that your beneficiaries may be eligible to collect money from
- Update your insurance information
- Create a list of passwords to important accounts
- Make copies of all documents
To perform these tasks, you will need to list out all of your assets. You also will need to itemize this inventory.
Go through items inside and outside of your home. Make a list of all valuable items. You can do this in a simple digital document.
It’s a good idea to take pictures of everything and upload those as well.
Make sure that you make notes of who comes to mind when you consider potential recipients for each item after your death.
5. Non-Physical Assets Exist in Inheritance Law
Keep in mind that not all assets are physical when it comes to inheritance law. Non-tangible assets also exist, and they’re usually just as valuable as those that you can see and touch.
Non-physical assets include IRAs, 401(k) plans, other retirement accounts, and life insurance policies. Bank accounts also qualify as non-tangible assets. There are also other policies to consider such as homeowner’s insurance, disability payments, child support, and more.
Add these assets to your comprehensive asset list. It’s important that you keep everything in one place.
6. There Are Multiple Types of Trusts
Setting up trusts with the help of an attorney is another critical part of estate planning. Trusts are agreements that let a third party hold assets on behalf of a beneficiary. These third-party trustees are usually banks, lenders, or trusted family members that will distribute assets.
Even those who know this often don’t know that there are multiple types of trusts relevant to inheritance law. The main ones are:
- Living trusts, which transfer assets to beneficiaries while you are still alive
- Testamentary trusts, which transfer assets to beneficiaries after your death
- Revocable trusts, which the grantor creates while living so they can alter it over time
- Irrevocable trusts, which can never be altered after their creation
Make sure that you discuss your trusts with an attorney. It won’t just help you designate your assets. It also is a legal requirement in many situations if you want your will and trust to be valid and incontestable.
Talk With an Inheritance Law Attorney Today
Inheritance law can be complex, but navigating it is a necessary step toward ensuring that your assets go to the right people in the future. Now that you know some estate law basics, it’s time to begin discussing your assets and drafting a will.
Boyer Law Firm is committed to helping you navigate the ins and outs of inheritance laws. We pride ourselves on offering a wide range of services to help you plan your estate with minimal challenges or burdens. Contact us today for a case evaluation and quote.