Who will receive your assets after you are gone? What will happen to your collection of avant-garde art or your beloved family home? Should you update your will?
These are questions you should consider at any stage of life, but especially if you are a senior or have been diagnosed with a terminal illness.
If you haven’t started personal or family estate planning, you should start as soon as you are able. Getting your affairs in order ensures that your assets will be distributed as you wish.
Learn more about wills, trusts and estates in this estate planning guide.
What is Estate Planning?
Estate planning includes making decisions about your health and your assets. Instead of leaving these decisions in the hands of family members, health professionals or state law, an estate plan puts the decision-making power in your hands. Your plans will speak for you if you become mentally incapacitated or pass away.
The best way to set up your estate is to seek out an attorney, who can draft the necessary documentation.
Know Your Estate Planning Options
There are several options to consider when planning your estate. You can direct future medical decisions with a living will and DNR order. Similarly, you can plan for the future of your finances with a durable power of attorney, will, trust or planned charitable giving.
Living Will & Testament
As you approach the end of life, there may be treatments you don’t wish to receive. Do you want doctors to try to resuscitate you if your heart stops? Do you want to be on artificial nutrition or a ventilator? A living will lets medical staff know which treatments you do not want should you be unable to speak for yourself.
Living wills are also known as advance directives. They help medical staff respect your wishes, and they take the pressure off of family members to decide what’s best for you.
Read more about advance directives here.
Durable Power of Attorney
You can legally appoint a healthcare or financial proxy to make decisions on your behalf. Your proxy will act in your best interest and help execute the wishes stated in your advance directive or will. Depending on your circumstances, you may wish to have one person be your healthcare proxy and another be your financial proxy.
Make sure you appoint someone as your durable power of attorney if you’d like them to be able to make decisions once you are unable. A non-durable power of attorney ends the moment you are deemed mentally incapacitated.
Your estate plan should include a will. This document will state who is to inherit your property and assets. A will must be signed and witnessed to be legal.
You want to name an executor, who will meet with the probate court upon your death, as well. Your executor can be a family member, close friend or trusted lawyer. Keep in mind a family lawyer or financial advisor may charge for executor services.
Once you pass away, your will must go through probate court. In this process, your executor will work with the court to approve your will and administer your estate. At this time, your will becomes public information.
If you do not draft a will, the state will handle your affairs and distribute your assets. An executor will be appointed to supervise your estate. Your estate will pay any probate court costs, attorney fees and appraisal fees.
Your property may not be distributed as you desire if you don’t draft a will. Often property is split between the spouse and children if no will is left behind.
There are multiple types of trusts. Living trusts function while you are alive. You can use your trust to transfer ownership of property. Naming yourself as a trustee gives you power over the trust. If you choose to name yourself for the time being, you will need to name a successor for after you pass away.
The difference between a living trust and an irrevocable trust is that living trusts can be changed while you are alive. Irrevocable trusts cannot be changed.
Many people establish a trust to avoid probate court. Assets titled in your trust go directly to the intended beneficiaries and not through probate. In other states, many people choose trusts to minimize estate taxes. There is no estate tax in Missouri.
Beware of living trust mills. Unfortunately, there are scammers who claim to help you create a living trust while using your information to sell you unsecure annuities and investments. Always work with an attorney who has credentials from the Missouri Bar or a professional with government accreditation.
Some people like their estate to go toward organizations they are passionate about. If you’d like to make a charitable donation, there are several ways you can do so.
Here are some examples:
- Bequest. This is a gift stated in your will.
- Retirement assets. You can name an organization as your beneficiary.
- Life insurance. You can transfer ownership of a paid policy to the organization of your choice. You may also list the organization as a beneficiary.
Confirm Your Beneficiaries
As you plan your estate, it’s crucial that you take inventory of your assets and confirm your beneficiaries. Your life and relationships may have changed since you first took out your savings account or purchased life insurance.
Marriage, divorce, death, children or grandchildren may mean it’s time to update your beneficiaries. You may change your beneficiaries at any time.
Confirm the beneficiaries of your:
- Bank accounts
- Joint bank accounts
- Insurance policies
- Other investments
It’s never wise to leave no beneficiary. If you don’t confirm your beneficiaries, retirement accounts, like IRAs and 401(k)s, can cause more hassle in probate court—even if you have a trust.
Many people have questions about additional taxes when it comes to their estate. Federal taxes only apply if your estate is above $11.5 million at the time of your death. If you have a large estate, the federal estate tax rate can run up to 40%. This tax comes out of the estate itself.
A few states apply estate taxes once assets are transferred upon death. As a Missouri resident, you won’t have to worry about estate taxes. Missouri stopped collecting them in 2005.
Cost-Free Care at Seasons Springfield
We know end-of-life planning can be difficult. At Seasons Hospice in Springfield, MO, our central goal is to make your last days better. We help you manage pain, find peace and connect with the ones you love.
Seasons Springfield believes everyone should have access to hospice care. We stand by our values by offering free care to any who seek it.