Our lives are limited. We know that. However, what makes our legacy last forever is what we pass on to our grandchildren and their children after that. Their inheritance is what makes them remember us because it’s the accumulation of our hard work in this world. It can be hard to plan out what will happen next in our lives, but inheritance can be planned now.
The median net worth of Americans who are 64 years and older is around $244,000. Some have bought a house and have invested in other opportunities once they’ve reached this point. Some might have earned more than the above net worth. However, none of this means anything if you don’t plan how you will distribute all of your assets once you’ve passed on.
Estate planning is the process of planning how your assets will be distributed once you’ve passed on. You write down the last will, and the court follows what you have written there when distributing your assets. First, however, you need to know a couple of crucial pieces of information about estate planning.
The most crucial information is that if your family has been known to have dementia, you should do it before the onset of such a disease. Various states determine the onset of dementia in various ways. Once you’ve been diagnosed with it, the law forbids you to make a will until proven that you have once rational thought and decision-making.
Recovery could be impossible with diseases like Alzheimer’s and Parkinson’s, as those diseases have only been known to worsen every time. If this is the case, then the designation of healthcare associate should be done. This designation will give a person the power to talk to your attorneys and lay down your instructions regarding your will. They can also make the necessary decisions for you. Having a trustworthy partner will make this easier.
However, there might be instances where you had not written your will before you passed on or dementia has fully taken your mind. During these instances, the court defaults to two kinds of laws, depending on your state. These are Community Property and the Common Law.
The community property law dictates that your spouse will earn half of your assets upon death, regardless of a will. However, this is determined by the court and whether you live in California, Arizona, Idaho, Nevada, Texas, Wisconsin, Alaska, and New Mexico. The remaining assets will then be distributed to inheritors, guided by the court to make sure that it’s equally as possible.
Community property can certainly have its own set of problems. One of the main problems is that if you’re divorce. During situations when there is no will, it defaults immediately to the person you’ve recently married. If you’re not married after your divorce, the court will determine how your assets will be distributed.
Another problem is when you have an untrustworthy spouse. The spouse might claim the inheritance and fight for what is remaining. Considering that they already got half, such a fight of attrition can easily be in their favor, leaving inheritors with nothing to their name. This can certainly be problematic, especially if you have many children in your family waiting for their inheritance.
This particular inheritance law is problematic because the spouse gets most of the inheritance. However, it can be one of the easiest ways to distribute assets if you have a trustworthy spouse.
Common law is found in the remaining states that weren’t mentioned above. In this inheritance law, your spouse doesn’t immediately get half of your assets once you’ve passed on. Instead, what they can have is determined whether if they have purchased it or not, or if a particular asset is under their name or not.
Generally, the common law is more versatile in asset distribution because there is a chance that other inheritors get a piece of your estate. It’s equally determined, which means everyone can get something out of their inheritance when they pass on. However, spouses are protected from being disinherited from any inheritance you might have. This is to protect spouses that might not necessarily have any income during the duration of the marriage.
Ultimately, it’s good to have a last will to avoid all sorts of legal problems when distributing your assets. This can certainly be problematic for families that have a turbulent relationship. However, by the end of the day, it will be the court that will determine how your assets will be distributed to your remaining family members.