An estate plan is the best way to be certain that your property and health care wishes are honored after your death. Legal problems can be minimized and avoided.
A will is a witnessed, written plan that explains how you want your estate distributed. Wills prevent the complication of dying intestate, or without one. If you die intestate, Idaho’s probate laws dictate distribution of your property to your heirs.
Wills usually contain provisions such as:
- Distributions of personal property to beneficiaries, such as family, trusts and donations
- A guardian for minor children and pets, if applicable
- A conservator, such as an executor or executrix, who will administer your estate
Avoidance of Probate
Probate is the court process that oversees the transfer of a decedent's assets and pays his debts and taxes. Probate authenticates the will, inventories property, settles debts, locates heirs, and distributes property in accordance with the terms of the will. In Idaho, probate can be informal without court hearings, or formal with full procedures.
You might not avoid probate completely, but limiting it can limit expensive and time-consuming legal processes. Idaho offers shortcuts for small estates with property valued at less than $25,000.
Some assets can be transferred without probate through options such as:
- Living trusts: Trusts can help reduce estate taxes when designed properly.
- Payable on death accounts: POD accounts transfer property at death to avoid probate.
- Joint tenancy: With joint tenancy, real property transfers to the surviving joint owner.
- An inter vivos gift is a way to transfer assets to beneficiaries during your lifetime, but it might result in possible gift tax implications.
Power of Attorney
Creating a financial power of attorney allows you to name someone to manage your personal business for you if you can't do so yourself. You can make the document “durable,” allowing it to continue in the event you become incapacitated, or “springing,” which means that it won't go into effect unless and until you become incapacitated.
Making end-of-life and advanced care plans ensures that your wishes will be honored if you become ill. An advance directive addresses incapacitating illness, not just end-of-life decisions.
- A living will states your wishes for the types of health care you want, such as life-sustaining efforts. It can also note if you want to make an anatomical donation.
- A power of attorney for healthcare states your appointment of a healthcare representative to make care decisions on your behalf.
Idaho offers most forms for these directives online. They're basic, however. If you require a more personalized document, consult an estate-planning attorney.
You can create a separate document detailing what funeral arrangements you'd like. This can avoid hassle, haggling and expense for your family.
- Prearrangement and prepayment: Be wary of prepayment. With inflation, additional money might be necessary when you die in order to honor your wishes. If you relocate, you might not receive a refund, and the company could go out of business before you die.
- A witnessed will can also record your wishes for final arrangements. You can use an insurance policy to fund your funeral by creating an irrevocable trust to hold the policy. This usually avoids estate taxes as long as the trust owns the policy, not you, and you give up control of the policy, such as the right to change beneficiaries.
- Estate taxes must be paid if the value of your estate exceeds $5.25 million as of 2013.
- Consider a family limited partnership under IRS “estate freeze” rules to reduce the estate tax liability. Without such a provision, your heirs might owe estate taxes as high as 55 percent, depending on the value of your estate.
- Set up a buy-sell agreement or a trust for the sale or succession of your business.
- Pets are considered property. You can provide for pets in your estate plan with a pet trust to ensure their continued care.