An estate plan is the best way to be certain your property and health care wishes are honored. Legal problems can be minimized or avoided altogether with proper planning.
Making a Will
Wills provide instructions for distribution of your property. They prevent the complication of dying intestate, which means that important decisions will be made by the state of Georgia according to its laws of descent and distribution. Dying without a will can also have adverse tax consequences.
The instructions you set out in your will affect how the assets of your estate are handled. Contents can include:
- Personal property distributions like gifts to family, trusts and charitable donations
- Designations for the care of minor children and pets, if applicable
- Naming the person to be your personal representative, or executor or executrix, to administer your estate
Detailed instructions in your will can prevent problems during probate.
Probate is the court process that transfers your assets accoding to your wishes and settles debts and taxes after your death. The probate process validates your will, appoints an executor, marshals property, handles debts, locates heirs, and distributes property in accordance with your will. If there is no will, your affairs are handled according to Georgia law.
Avoid probate whenever possible to avoid the expensive and time-consuming legal process. In Georgia, an estate cannot qualify as a small estate unless there is no will. Georgia allows for the transfer of a bank account to an heir if the account balance is not more than $10,000, and in low-value estates, for the filing of an order declaring no administration necessary if all heirs are in agreement and there are no debts.
Other means of transferring assets without probate include:
- Living trusts: Provide tax advantages to beneficiaries because trusts don’t go into probate and creditors cannot access the trust.
- Transfer on death registration for vehicles and property: Avoids probate because the asset goes to the remaining joint owner of real estate, bank accounts, vehicles, brokerage accounts and individual stocks and bonds.
- Inter vivos gifts: Transfers assets to beneficiaries while you are alive, limiting taxes on the estate.
Power 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 choice for you. By specifying that the document is effective immediately, you’re covered at once. If you create a "durable" power of attorney, the arrangement continues into the future. A “springing” durable power of attorney becomes effective at a later date upon your incapacitation.
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, not just end of life decisions. Planning choices include:
- A living will states your wishes for the type of health care you desire, including life-prolonging procedures and anatomical donations.
- A power of attorney for healthcare appoints a personal representative who will make health care decisions on your behalf if you are incapacitated.
Georgia offers most basic probate forms online. If you require a more personalized document, it is best to consult an estate-planning attorney.
Your estate plan can document your funeral instructions, or you may create a separate, recommended document called the Details of My Final Arrangements. This important document can avoid the hassles and expenses for your family by providing for prearrangement and prepayment of funeral expenses. Be aware that if 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.
A witnessed will or last letter of instruction can record your wishes for final arrangements. Funding can be by an insurance policy made payable to an irrevocable trust or with funds set out in a special bank account for this purpose.
Other matters that may be applicable to your situation include:
- Estate taxes will probably need to be paid if your estate is over $5.25 million for deaths in 2013.
- Life insurance policies can help your family members to manage final costs.
- Consider a family limited partnership under IRS “estate freeze” to reduce the estate tax liability. Without it heirs might owe high estate taxes. Set up a buy-sell agreement or trust for the sale or succession of your business.
- Pets are considered property. Provide for them in your estate plan to ensure their continued care. A pet trust or pet guardian can be created for your pet’s welfare.
It can be difficult to keep up with complex federal and state probate laws. Ensure your estate is disposed of according to your wishes by speaking with an estate-planning attorney in Georgia.