Frequently Asked Questions
Dying without a will is referred to as dying “intestate.” If you die without a will, it is up to the state to decide how to distribute your assets. In most cases, the majority of your estate will go to your surviving spouse, and the rest will be distributed to your descendants equally. If you do not have a surviving spouse or descendants, your estate will be distributed to your next closest living relatives, like parents, grandparents, or cousins. In general, dying without a will is not recommended, as you lose control over how your estate is distributed after death.
Your estate is any property that you own at the time of your death. This can include real estate, houses, investment properties, securities, jewelry, motor vehicles, bank accounts, and more. Your estate administration is formed after you die, and it is up to the executor of your estate to distribute these assets according to your wishes. You can dictate how your estate will be divided in a will or trust. If you do not have a will or trust or your instructions are unclear, the state will decide how to distribute your estate to family members.
The probate process is done by the court to examine and enforce the will. During the probate process, the executor of the will must file papers with the court to inform them that an individual has passed. Then, the executor will prove the legality of the will and provide documentation of all assets and debts, as well as a list of beneficiaries named in the will. The probate process can take multiple months or even a year, especially for complex estates. The executor must follow all instructions in the will and tie up loose ends in the estate before it can be closed.
A living will, also called a healthcare directive, is an estate planning document detailing an individual’s medical wishes. This can include medical treatments they wish to receive, medical treatments they don’t want, and more. In most cases, living wills are used when an individual is incapacitated and can no longer make decisions independently due to illness, injury, or disability. A living will is not the same as a last will, as a last will is only used after an individual passes away. Living wills are only used while an individual is still alive.
If you are planning to pass on assets to beneficiaries from your estate, it’s important to think about inheritance tax. Inheritance tax is based on the value of an asset after it is received by a beneficiary, not the total value of the estate itself. Inheritance tax is calculated on a state-by-state basis, and currently, only six states require an inheritance tax to be paid. Because there is no federal inheritance tax, it is unlikely that your beneficiaries will have to pay taxes on their inheritance unless they live in one of those states.
Yes, you can use estate planning documents to donate some or all of your estate to charity. In many cases, leaving money to charity will reduce the inheritance tax that must be paid, if applicable. When choosing an organization to donate to, it is essential to pick one that is government-recognized and maintains a charitable organization status. Otherwise, these exemptions may not be applicable. It is also important to note that family members can contest these donations, especially if they are sizeable. Any family disputes can elongate the probate process, leading to assets not being distributed in a timely manner.
Power of attorney is a document that gives another person the power to make decisions on your behalf. Depending on the type of document you create, you can give someone the ability to make financial decisions, medical decisions, or both. Power of attorney documents are typically used when a person is incapacitated due to illness or injury and unable to make decisions on their own. They are especially useful for keeping businesses running and liquidating assets to provide for family members who may be struggling financially. Powers of attorney are only applicable when an individual is alive and are no longer viable after the individual has passed.