American culture focuses on getting things done quickly. Families no longer take the time to change through each individual channel on their televisions, but use a remote control to jump to the desired channel in the blink of an eye. Individuals no longer take the time to send out carefully written letters, but instead instantaneously send out text messages.
These conveniences can offer productive shortcuts in many areas of daily life, but in others they can lead to headaches. One area of particular concern is estate planning. The Internet and certain estate planning tools can cut down on the amount of time needed to set up and distribute assets in the event of your passing, but at what cost?
The Internet offers convenience, but may not meet your wishes
The Internet can provide a shortcut to many of life's complications. A popular example is the use of tax software to help guide people through each step when filing their taxes. Although this type of service has worked well for many, others can cause problems. One type of software that can lead to issues is the use of similar programs to cut corners on estate planning.
A key to a solid estate plan is the ability to prepare for a wide array of contingencies. What happens if you die and a spouse survives? What happens if one spouse and the couple's children die but the other spouse survives? Generic wills available for purchase online do not account for the many possibilities that can lead to distribution of an estate. Although no one can cover all possible scenarios, discussing wishes with a professional can help ensure that most possibilities are accounted for.
POD accounts can lead the IRS to demand payment from loved ones
Another estate planning shortcut that can lead to problems is the use of POD, or payable on death, account. These accounts transfer funds directly to named beneficiaries in the event of the owner's death. Various accounts can be set up as POD accounts, including checking accounts, savings accounts, insurance policies and some types of trusts.
Although these accounts can be a valuable part of a balanced estate plan, allowing assets to shift to loved ones in a relatively quick and painless manner, they can also cause problems. Overuse of POD accounts can drain the assets in the estate. This can lead to a lack of funds necessary to pay off taxes and other bills and, in some cases, result in creditors demanding payment from loved ones. Taking proactive planning steps can help prevent loved ones from dealing with demands from creditors like the Internal Revenue Service.
A professional can help
A balanced estate plan can help ensure that your desires are met and also take advantage of tax savings. This plan may include the use of an array of legal tools including a will, various trusts and payable on death accounts.
If you or a loved one is putting together an estate plan, contact an experienced estate planning attorney to better ensure the right legal tools are used to meet your wishes.