Estate Planning

Why Estate Planning?

Did you know you have an estate?  Almost everyone does. An estate is comprised of everything you own— your car, the family home, rental real estate, that vacation timeshare, your checking and savings accounts, investments, retirement accounts like your company 401k, life insurance, furniture, personal possessions. No matter how big or small, everyone has an estate and we all have something in common—you leave it behind when you die.

When that happens—and it will since the current mortality rate is 100%—you probably want to decide how those things are distributed to the people or organizations you support. To make sure your wishes are followed, you need to provide directions stating who you want to receive something of yours, what you want them to receive, and when they are to receive it. If they are not to receive it immediately, you need to provide for interim management. You will, of course, want this to happen with the smallest amount of shrinkage from transfer taxes, lawyer fees, and court costs. Your personal privacy is also typically a concern.

That is the definition of estate planning—making a plan in advance and naming those you want to receive the things you own after you die. However, good estate planning is much more than that. It should also:

  • Express your values (religion, education, hard work, etc.) in addition to distribution of your valuables.
  • Include instructions and provisions for your care if you become disabled before you die.
  • Name a guardian and an inheritance manager for minor children.
  • Consider and provide for family members with special needs without disqualifying or disrupting government benefits.
  • Contain a mechanism to provide for loved ones who might be irresponsible with money or who may need future protection from creditors or divorce.
  • Include life insurance to provide for your family at your death, disability income insurance to replace your income if you cannot work due to incapacity, and long-term care insurance to help pay for your care in case of an extended illness or injury.
  • Provide for the transfer of your business at your retirement, disability, or death.
  • Minimize taxes, court costs, and unnecessary legal fees.
  • Be an ongoing process, not a “once and done” event. Your plan should be reviewed and updated as your family and financial situations (and laws) change over your lifetime.

 Everyone needs Estate Planning.

It isn’t just for the “nearly dead”, although people with serious illness do tend to think about estate planning as they consider end of life decisions. However, we can’t, with certainty forecast how long we will live, and accidents and unforeseen illnesses can happen to people of all ages.

Estate planning is not just for “the wealthy,” either, although people who have accumulated some wealth do often think more about how to preserve it. Good estate planning often means more to families with modest resources, because they can afford to lose the least.

Too many people don’t plan.

Currently , over 90% of individuals in the U.S. lack a comprehensive estate plan.  Only 35% even have a simple will.  Many put off estate planning because they think they don’t own enough, they’re not old enough, they’re too busy, think they have plenty of time, they’re confused and don’t know who can help them, think it’s too expensive or they just don’t want to think it. Then, when something unexpected happens, their families are left to pick up the pieces.

Not to Decide is a Decision – If you don’t have an Estate Plan, your State has one for you, and you probably won’t like it.

At disability: When your name is on the title of your assets and you are unable to conduct business due to mental or physical incapacity, only a court appointee can sign for you. The court, not your family, will control how your assets are used to care for you through a conservatorship or guardianship (depending on the term used in your state). This can become expensive and time consuming, it is open to the public, and it can be difficult to end even if you recover.

At your death: If you die without creating your own estate plan, your assets will be distributed according to the probate laws of your resident state. In many states, if you are married and have children, your surviving spouse and children will each receive a share. That means your spouse could receive only a fraction of your estate, which may not be enough to live on. If you have minor children, the court will control their inheritance. If both parents die (i.e., in an accident), the court will appoint a guardian without knowing whom you would have chosen.

Would you prefer these matters be handled privately by your family, not by the courts? Would you prefer to keep control of who receives what and when? And, if you have young children, would you prefer to nominate who will raise them if you can’t? You do have the choice, but only if you claim it.

 An Estate Plan starts with a Will or Revocable Living Trust.

A Last Will and Testament delivers your instructions, but it does not avoid probate.

 All assets titled in your name or passed by your will must go through your Resident State’s probate process before they can be distributed to your beneficiaries. (If you own real estate in other than your resident state, your heirs will probably face ancillary probates, for each of those states pursuant to the laws in that state.) The process can vary greatly from state to state, but it’s usually expensive, time consuming and public. Probate files are almost always open to the public and will contests and challenges are not uncommon. Control of your estate distribution is with the court system, not your family or those whom you trust.

All that you own may not go through probate. Jointly-owned property that have “rights of survivorship” and assets that allow you to name a beneficiary (for example, life insurance, IRAs, 401(k)s, annuities, etc.) are not controlled by your will and usually will transfer to the new owner or beneficiary without probate. However, there are many potential problems with joint ownership, and avoidance of probate is not guaranteed. For example, if a beneficiary dies before you and an alternate beneficiary is not named, the assets will have to go through probate and will be distributed along with the rest of your estate. Should you name a minor as a beneficiary, the court will probably require a guardianship until the child legally becomes an adult. If you’re like most, you probably don’t desire that a significant inheritance be given to your loved ones without restrictions at a young age.

For these reasons, and numerous others, a Revocable Living Trust is favored by many families and professionals. A Revocable Living Trust can avoid probate (including multiple probates if you own property in other states), prevent the Court taking control of assets at your incapacity, bring all of your assets (including those with beneficiary designations) together into one plan, provide maximum privacy, is valid in every state, and can be changed by you (amended or revoked) at any time. It can also convey your love and values to your family and future generations.

Unlike a Last Will and Testament, a Revocable Living Trust doesn’t die with you. Assets can stay in your trust, managed by the Trustee or Trustees you selected, until your beneficiaries reach the age you want them to inherit. Your trust can continue even longer to provide for a loved one who has special needs, or to protect the assets from your beneficiaries’ creditors, spouses, and irresponsible spending.

Although a living trust is initially more expensive than a simple will, as Zig Ziglar often said, “in the final analysis The Best Costs Less”.

Planning your estate will aid you in organizing your records and insure correct titles and beneficiary designations are in place.

How would your family know where to find your financial records, titles, and insurance policies if something happened to you? Taking time now to plan your estate will help you organize your records, locate titles and beneficiary designations, and find and correct errors.

Life changes happen. Most don’t give much thought to the wording they put on titles and beneficiary designations. Once made, deeds, titles, insurance policies, bank account papers and the like are often thrown into a file cabinet, safe deposit box or the sock drawer.  Even with best of intentions, an innocent error can create all kinds of issues for you and your family at your disability and/or death. Beneficiary designations are often out-of-date or otherwise invalid. Naming the wrong beneficiary on your tax-deferred plan can lead to devastating tax consequences. Shouldn’t you take the time to do this correctly now rather than your family pay an attorney to try and fix things later?

Estate planning does not have to be expensive.

With the power of technology has made comprehensive Estate Planning affordable.

The best time to plan your estate is now.

No one really likes to think about our own death or the possibility of being unable to make our own decisions. This a major reason why so many families are caught off-guard and unprepared when incapacity or death does strike. Don’t wait! You can put something in place now and change it later…which is exactly the way estate planning should be done.

The best benefit is peace of mind.

Knowing you have a well thought out, properly prepared plan in place – one that expresses your desires instructions and will protect your family – will give you and your family peace of mind. This is one of the most thoughtful and considerate things you can do for yourself and for those you love. You have a choice to leave a legacy of peace or chaos.  Choose peace.

It costs you nothing to start the process.  Click here to get started now.