Once you become an adult you begin to start accumulating belongings that are considered an estate. No matter how big or how small, you do in fact have an estate. Bank accounts, your home, any other property, your car, everything you own is a part of your estate, including items as minuscule as pictures or your favorite pair of shoes. All of these things belong to your estate.
When you pass away your personal belongings pass to your loved ones or to others that you would like to receive your things, including what money you have. The problem is that you must go through the legal process of determining and stating who will receive what. If you do not, much of what you own will be distributed as the courts see fit.
That is why having a plan is so important when it comes to your estate.
What is Estate Planning?
Estate planning is exactly what it sounds like. Making plans on what is to happen to your estate after you pass. This will help determine what will happen to your belongings after you die.
The reality of what will happen when you don’t have a plan for your estate in place is not one most people would like. Depending on what state you live in the probate laws may vary, however, the laws in Florida state that your spouse and children will receive everything in the event of your death.
The unfortunate problems with simply not writing a will and testament is that your loved ones will have to wait throughout the probate process before receiving any of your belongings. Your spouse or any other loved ones will have to wait up to 6 months to a year before the probate process is complete.
So How Do You Go About Estate Planning?
Estate planning is not a short or simple process and must be well thought out. There are many different steps and things that most people simply wouldn’t think about but we can go over several important steps of the estate planning process with you!
- Deciding what will happen to all of your belongings when you pass is the first step. This means looking at who you want to receive what, be it family, friends, or even charitable organizations.
- Another important aspect of planning your estate is to plan for what will happen to you if you were to become impared. Say you were disabled in an accident and on life support. You will want to make it clear what you would decide is important for your care.
- Then you will want to look into life insurance if you have not already. Most families nowadays could not survive off of just one income. Life insurance would help your family if anything should happen to you. Death and disability income could really help your family should you pass or be unable to work after an illness or injury.
- Naming a guardian for your children should you and your spouse both pass.
- You will need to write a will and testament stating what you would like to be done with your belongings when you pass in great detail.
Why Do You Need an Appraisal for Estate Planning?
There are actually several really important reasons you need an appraisal when going through your estate planning.
- Anything that you own of immense value will need appraised. This is important because even when you gift an item you need to report it on your taxes and it can actually help to reduce your estate taxes.
- An appraisal of your home is crucial to your value reference point. Due to the ever changing real estate market, getting an annual updated appraisal of any real estate you own is important for your estate planning (not to mention your property taxes).
- Retrospective appraisals are also important for after a loved one has passed. They are also known as date of death appraisals because they are determined from the value of the assets at the time of the owner’s death.
- Remember, the cost of an appraisal is usually tax deductible!