Key Takeaways:
- A well-crafted estate plan provides clear instructions for the distribution of assets, minimizing the potential for disputes among beneficiaries.
- Estate planning goes beyond a simple will and can include trusts, healthcare directives, and powers of attorney.
- Probate can be a complex and lengthy process, but a comprehensive estate plan can simplify it significantly.
- Failing to plan can lead to unintended consequences, including increased taxes and family conflicts.
- Consulting with an estate planning attorney is crucial to ensure your wishes are legally sound and effectively carried out.
After a person passes away, a family can often find themselves at odds over who is entitled to different parts of the estate. A granddaughter may feel like she should have an heirloom necklace she was once promised for her wedding day, but an aunt might contest it should go to her since it once belonged to her mother.
Family disputes over wills are a good reason to seek an estate lawyer in South Dakota. Attorneys can help mediate a resolution before a will goes to probate court, and if it is currently in probate, they can expedite the process.
If you are currently planning your estate, a clear plan is crucial to preventing family disputes after your death. Grief is challenging enough, and disputes can make it harder for loved ones to heal from someone’s passing. Clear estate plans written with the help of a lawyer can help you prevent unnecessary fighting among inheritors.
In this guide, the team at Alvine Law Firm explores how to plan an estate to prevent family disputes.
Components of a Comprehensive Estate Plan
Many people are surprised to discover how detailed an estate plan can be, as many are only familiar with wills and trusts. While these are the foundations of a solid estate plan, there are many details often overlooked that cause estates to go to probate.
In any comprehensive estate plan, there should be:
- Will: A will outlines the distribution of assets following your death and appoints legal guardians for minor children.
- Trusts: There are two types of trusts — revocable and irrevocable. Revocable trusts can be changed while irrevocable trusts are permanent. An irrevocable trust cannot be altered without approval from beneficiaries or the court. They are often used to safeguard assets and avoid probate.
- Healthcare Directives: Living wills and healthcare powers of attorney appoint one or more individuals to make decisions regarding a person’s care if they are incapacitated or facing the end of their life.
- Financial Power of Attorney: A financial power of attorney is a legal document that appoints someone to make financial decisions on your behalf if you are incapacitated.
- Beneficiary Designations: It is important to review your beneficiary designations at least once per year and ensure they are accurate. You should also update retirement plans and life insurance policies to ensure they are current and align with the directives of your will.
Avoiding Probate and Minimizing Taxes
Probate can be an expensive, time-consuming experience for families. A will on probate also becomes public record, which can invite further disputes from people who believe that they have a claim to the estate. Debt collectors, disinherited heirs, lenders, medical providers and other parties may lay a claim to an estate in probate.
Taking certain measures to protect your assets can help prevent probate, even in the event of family feuds. For one, a trust can be a safety net of sorts that protects assets from creditors, lenders, debt collectors, and more.
The trust allows a trustor to guarantee that their assets will be distributed according to their wishes, and it can minimize state and federal taxes for beneficiaries.
Trusts can be left to a trusted relative or friend or to an attorney. Estate lawyers can handle trusts and wills on your behalf to ensure that your assets are managed appropriately.
While trusts can be more time-consuming, they can be an effective strategy for preventing family disputes over wills. South Dakota allows trusts to be made for charitable and non-charitable purposes; the state also gives trustors a great deal of control over how they may direct the responsibilities of their trustee.
South Dakota also allows Domestic Asset Protection Trusts (DAPT), which protect a grantor’s assets from creditors.
Common Mistakes in Estate Planning
To help you avoid disputes and probate over your estate, here are several mistakes to be aware of and avoid:
Failure to Plan
Lack of a will automatically sends an estate to probate, and there is no guarantee that assets will be distributed to desired inheritors by the court. When someone dies without a will, creditors and debt collectors can take anything they’re owed, and the estate will be distributed according to intestate probate proceedings.
This means that inheritance will follow the set pattern according to SD law, which distributes an estate to a living spouse first (Codified Law 29A-2-102). If you do not have a spouse, then it is distributed among children in equal shares. If you do not have children, then your estate goes to your parents, and if your parents are not alive, then your siblings will inherit your assets.
To ensure that your estate is distributed to the beneficiaries you would like, then you should plan a will and/or trust as soon as you can, even if you are currently young and in good health.
Outdated Documents
It is important to review estate documents at least once per year to ensure that they are up-to-date and reflect current assets and designation wishes. This is especially relevant after major life events, such as marriage, divorce, the birth of a child, or the disinheritance of a beneficiary.
Unclear Language
A will should clearly direct the executor to distribute assets to beneficiaries. Avoid using ambiguous language or conflicting statements that could lead to disputes. Be as precise as you can, avoiding any vague terminology or leaving distribution to an executor’s discretion.
Improperly Executed Documents
A will must be written in order to be valid in South Dakota (Codified Law 29A-2). Even documents not written in compliance with state laws can still be used as a will if clear evidence proves they were written by the benefactor with the intention of distributing their estate (Codified Law 29A-2-503).
The Role of an Estate Planning Attorney
An attorney who helps their clients plan their estates ensures all of their documentation complies with state law. They can help you determine the best way to manage your wealth and assets and distribute them according to your wishes.
You can even appoint your attorney to be the executor of your will or trustee. They will manage the distribution of assets following your death and help prevent your estate from going to probate.
Additionally, an estate planning attorney can review existing estate documents and recommend changes, draft legal documents for you, ensure compliance with South Dakota estate laws, and provide ongoing support and updates as necessary.
Consult With an Estate Planning Attorney in Sioux Falls, SD
The team at Alvine Law Firm takes your estate seriously, and we will help you create a solid plan that protects your assets and the people you love. To schedule a free consultation with one of our estate lawyers, please call 605-275-0808 or contact us online.
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