Be certain your property and health care wishes are honored is by making an estate plan. With an estate plan, legal issues that may come up after death can be minimized and even avoided. Learn more about estate planning in Delaware.
Creating your will
Making wills aren’t complicated, and having one in place will prevent the complication of dying intestate. If intestate, your estate will be taxed at the most. Any important decisions will not be made by you, but up to the state of Delaware.
Your will should contain:
- Any personal property distributions such as gifts to family, trusts and any donations
- Requirements for minor children and pets if applicable
- Who you wish to be executor or executrix and who will handle your estate
Probate is a court process whereby the deceased person’s debts, taxes and assets are transferred appropriately. Probate authenticates the will, names an executor, catalogs property, handles debts, finds heirs and distributes property in accordance with the will—if there is no will, then according to Delaware law. Probate is best avoided because it costs money and takes time. Delaware offers probate shortcuts for low value estates of under $30,000.
Many assets can be transferred outside of probate including:
- Living trusts provide tax advantages to beneficiaries. Trusts don’t go into probate. Creditors cannot access the trust.
- Transfer on death registration for vehicles and property transfer will avoid probate as the asset goes to the remaining joint owner of real estate, bank accounts, vehicle, brokerage account, and individual stocks and bonds.
- An inter vivos gift transfers assets while alive and limits the tax burden to beneficiaries. What you do not own cannot be taxed.
Powers of attorney
Arranging a financial power of attorney allows you to choose the person you want to manage financial choices for you if you become incapacitated. This step avoids the court making the choices for you.
By marking the document, effective immediately, you’re covered at once. Adding that the power is "durable" allows the arrangement to continue into the future. A "springing" durable power of attorney enacts later, upon incapacitation.
Advanced care planning
Making end-of-life and advanced care plans ensures your wishes are honored should you become ill. An advance directive applies for any incapacitating illness and end-of -life decisions. Planning choices include:
- A living will, which elucidates your wishes for health care including if you wish to receive life support systems or not
- Power of attorney, which spells out the appointment of a health care representative who will make health care decisions on your behalf
Delaware offers forms online. These forms are basic, and should you require a customized document, consult an estate-planning attorney.
Planning your funeral arrangements
Document your desired funeral provisions in the estate plan. This step avoids the grief and expense for the family. Choices include:
- Prearrangement/prepayment—Be wary of prepayment since inflation may necessitate an additional money layout upon death. Should you relocate, it is possible to lose the value of the contract, you may not receive a refund and the company can go out of business.
- Documentation—Record your final arrangements with a witnessed will, power of attorney, living will or final letter of instruction. An insurance policy made payable to an irrevocable trust, or special bank account can fund the arrangements.
Other planning decisions
There are other matters that may be applicable to your situation. Consider:
- Estate taxes may need to be paid if your estate is more than $5.12 million for the first half of the year 2013.
- A life insurance policy is one way to help your spouse or family handle the final costs.
- Create a family limited partnership under IRS "estate freeze" to reduce tax liability. Heirs could owe estate taxes as much as 55 percent if you do not have a plan in place. Arrange a buy-sell agreement or trust for sale or succession of your business.
- Pets are property and arrangements for pets may be made in the estate plan to be sure of your animal’s sustained care. A pet trust or pet guardian may ensure your pet’s well being.
Federal and state probate laws change often. Be certain your estate is managed in accordance with your wishes by contacting a Delaware estate-planning attorney.