The Cobb Group Blog

Unfortunately, estate planning is a legal necessity—unless you're hoping to drive your beloved family members into a no-holds-barred catfight over assets after your death. In which case, drop lots of provocative, contradictory hints about how much is in your estate and who might be getting it. But if not, you need to map out an estate plan—how you want your assets allocated postmortem—especially if you're a homeowner, since a home is the largest asset most people own.

Before you start the process, here's what the experts and attorneys wish you knew about estate planning and the legal documents that go with it.

1. Think about death—even though it’s scary

It's not fun to think about, but death happens to everyone. Yes, like taxes. And you know what happens when you don't prepare for your taxes.

"Most people overlook the inevitability of death," says Jennifer Kain Kilgore, a former estate planning attorney in Natick, MA. "It's always lovely to think about the present, but it never hurts to plan ahead."

Even if you're young. Accidents happen. Start estate planning now.

2. Dying without a will is never pretty

While it's true that you won't be the one suffering the consequences of death without an estate plan (or with one that is not as clear as it should be), consider your family. They'll be forced to go through probate, where an executor is chosen. And it's a seriously long and painful legal process.

"I saw the worst side of humanity there," says Kilgore, who was in charge of probate at her former firm. "When money and real estate is involved, family members will sue one another. I've seen it before, and it's not pretty."

Pass away without a plan or squeak by with a poorly made do-it-yourself end-of-life plan, and the state will determine how your assets are distributed—and they don't care if you didn't want everything to go to your horrible brother. (You can look up general guidelines here.) An estate attorney, on the other hand, will take your individual situation into account when determining the best estate plan for passing on your home.

3. Inventory your belongings

The first step in creating a will is to inventory all of your assets—everything from your house to your finest china to important paperwork. (As a bonus, this practice is also extremely helpful for insurance purposes.) Why does it matter? You can't decide who gets what in the estate without knowing what what is, says Wendy Pelle-Beer, an attorney in Fresh Meadows, NY. Things that Pelle-Beer recommends homeowners track down include:

• bank accounts

• insurance policies

• retirement plans

• stocks and bonds

• cars (and their associated paperwork)

4. Always name an executor

You may not want to decide between your oldest daughter and your favorite brother, but failing to name an executor for your estate is a huge mistake.

"The homeowner assumes that, just because they have a will, everything's covered," Pelle-Beer says. But failing to designate an executor (or executrix) "means the court decides who may be appointed to distribute your assets and carry out the instructions in the will."

That could mean your grumpy Uncle Bert, who's determined to squeeze every bit of misery and pain from your family in the weeks following your death. Avoid those terrible consequences by estate planning early and choosing a trustworthy executor for your estate.

5. Property tax exemptions are complicated

A variety of city, state, and federal rules affect the estate taxes that you or your executors will be expected to pay—as does the specific way you've established ownership. To understand the estate tax structure fully, you're going to need an in-person consultation with an estate planner.

For instance, you might be worried about putting your home in a trust, because "many homeowners are wrongfully told that ownership of a home in a revocable trust will disqualify the homeowner for property tax exemptions," says Jeffrey A. Asher, an estate planning attorney in New York, NY. "That's not necessarily true."

In many circumstances, homes in a trust are treated like the personal property of the grantor (you).

6. Regularly review your beneficiaries

Maybe for a while you did have a good relationship with your salty Uncle Bert—until you finally recognized his terrible ways. When relationships change, make sure to review your beneficiaries and adjust accordingly in your estate plan.

Because life insurance and retirement money is distributed outside your will, it's easy to overlook during estate planning. You may have chosen someone when you signed up for the plan years and years ago. If that someone is dead, or you're divorced, or you just plain old don't like them anymore, make sure to change your designation in the legal documents.

7. Long-term care doesn't mean sacrificing your home

Elderly homeowners in need of long-term care might worry that their home—which they had hoped to pass down—will become collateral to pay for assisted living instead of an inheritance.

"Many homeowners don't know that you can own your home and keep your income and keep some assets and still qualify for government benefits for long-term care," Asher says.

As with all matters of your estate, a consultation with a planner is necessary to determine precisely how the bevy of local, state, and federal taxes affect you and your possessions. But don't despair just because you need care—there are legal options available to make sure you're comfortable and that your estate stays intact.

By Jamie Wiebe | Sep 16, 2019 as seen on realtor.com

Image by: Glenn Carstens-Peters/Unsplash