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Steps Involved in Inheritance Planning

Most people understand the importance of inheritance planning; however, over half of all Americans do not have an inheritance plan in place despite knowing they need one. There are a number of reasons people give for their lack of an inheritance, or estate, plan, but one of the most common is that they simply don’t know where to start. Unless you have some experience with it, inheritance planning can appear a bit intimidating. The good news is that it really isn’t as complicated as it appears, particularly if you work with an experienced estate planning attorney during the creation of your plan. Of course, every estate plan is as unique as the person creating the plan; however, there are some common steps involved in inheritance planning. Knowing what those steps are may take some of the apprehension out of getting started.

Common Inheritance Planning Steps

Although your inheritance plan may not include all of these steps, or may include additional steps, the following are some of the most common steps involved in creating a comprehensive estate plan:

  • Define your objectives. This may seem obvious; however, once you sit down and think about it, you will likely realize that you have several important inter-related objectives relating to inheritance planning. Deciding how your estate assets are to be distributed when you die is, of course, a primary objective of most estate plans. Beyond that, however, you may also include additional objectives in your plan, such as:
      1. Asset protection
      2. Probate avoidance
      3. Incapacity planning
      4. Pet planning
      5. Medicaid planning
      6. Tax avoidance
      7. Retirement planning
      8. Special needs planning
      9. Business succession planning
  • Assess your assets and liabilities. Before you can get started on your inheritance plan, you need to have a firm understanding of your current assets and liabilities. Most people have a general idea, but you might be a bit surprised where you stand when you actually sit down and make detailed lists of your assets and liabilities.
  • Do the math. If one of your goals is to provide for a spouse and/or children in your estate plan, you need to know what it will take to do that. This requires you to do the math. There are several online resources that can help you and/or you can consult with your financial advisor. If you are just starting out in your career, you may find that you need to purchase additional life insurance to supplement the assets you currently have.
  • Choose fiduciary roles. You will need to appoint an Executor in your Will and a Guardian if you have minor children. You will also need to appoint a Trustee if you are including a trust in your plan. Don’t make the mistake many people make of appointing someone to a position without taking the time to consider if the individual is the right person for the job. If you are unsure what the role entails, discuss the position with your estate planning attorney to ensure that you appoint the best person for the job.
  • Create a Last Will and Testament. Do not rely on a DIY Last Will and Testament form you find online. The time and money you may save going the DIY route now will almost always end up costing your loved ones considerably more time and money when it comes time to probate your estate because of the errors, omissions, and vague provisions commonly found in these forms. You ow it to yourself and your loved ones to work with an experienced estate planning attorney when you create your plan.
  • Share your plan. You are not required to share your inheritance plan with anyone; however, it is a good idea to at least give your Executor a copy of your Will so that he/she is prepared when the time comes to initiate the probate of your estate. Sharing the general terms of your plan with beneficiaries now can also eliminate disputes down the road in many cases; however, the decision to share or not is entirely yours to make.

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If you have additional questions about inheritance planning in North Carolina, contact an experienced North Carolina estate planning attorney at The Law Offices of Cheryl David by calling 336-547-9999 to schedule an appointment.

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