Why Do You Need An Estate Plan?
LAWRENCE & ASSOCIATES, INC., has an active estate planning practice. We have assisted many Clients in developing their estate plans. We also have been involved in many cases when our Client’s loved one has died leaving an inadequate estate plan, or no plan at all.
It is odd that many people plan their funerals, but those same people have not planned their estates. In fact, the majority of Americans do not even have a Will. We have heard numerous reasons why people do not have an estate plan. This article will present a sampling of those reason, as well as our typical responses.
“My children will do the right thing.”
Fortunately, most parents are correct when they make that statement. However, we have seen many cases where, after a parent dies, greed takes over and the children do things the parent never dreamed of. In fact, in one case two sons fought over their father’s Cleveland Browns jacket. That’s right, a lawsuit was started over a jacket!
“My estate will not have to pay estate taxes.”
This statement is true in the majority of cases. Current tax law provides that, if you die owning assets worth less than $3,500,000, no federal estate tax will be due. However, you may be subject to state estate taxes at much lower asset levels. The tax law also provides that many assets which common sense tells us should not be included in our estates are added. For example, the death benefits paid to your heirs at your death on life insurance policies you own typically are added to your taxable estate. In addition, there are many non-tax reasons to plan.
“My spouse will inherit everything from me.”
This statement is true in many cases. However, what if your spouse or you have children by a prior marriage? What if your spouse and you die simultaneously? What if your spouse remarries after your death? What if your minor child decides to drop out of school? A properly drafted estate plan addresses these and other “what if’s.”
“I told everyone what I want.”
Memories fade. People hear what they want to hear. In the suit over the Cleveland Browns jacket, each son testified, under oath, that his father told him that he wanted him to have the jacket. If you want to ensure that your property goes where you decide, the only way to do so is through a properly drafted and executed Will or Trust.
“It is too complicated.”
You do not need to have any special legal skill or knowledge to have an effective estate plan. Generally, all you need to do is tell your attorney (who should be experienced in estate planning matters) what goals you want your estate plan to accomplish, and let the attorney draft your documents accordingly.
“I already have a Will.”
This statement raises two concerns. First, if you already have a Will, you should review it at least annually to ensure that it still expresses your wishes. In fact, in many cases we review our Client’s Will and suggest no changes. Second, a complete estate plan has much more than a Will. Although a properly drafted Will is the cornerstone of any estate plan, your plan also should have powers of attorney so that you can designate who will handle your business and who will make medical decisions for you if you become incapacitated. Many estate plans also include Trusts established for any number of purposes, such as saving taxes or minimizing probate.
“I will do it later” or “I’m too busy.”
Except in cases of imminent death, there is no great rush to complete an estate plan. The plan should be well thought out and done at a reasonable pace. However, you do not want to wait forever. If you lose your ability to understand the nature and effect of your estate planning documents, you will be prohibited from signing them. For example, if you lose your mental capacity because of Alzheimer’s or an automobile accident, you will not be able to execute an estate plan.
“I don’t want to think about it.”
No one wants to think about the inevitable. However, many of our Clients express their sense of relief when they execute a plan, and satisfaction that they do not have to worry about not having a plan anymore.
“It is too expensive.”
It is no secret that lawyers are expensive. However, our fees for completing an estate plan are probably less than you might think. In addition, think about how much money your heirs could save in taxes, legal fees, and other costs if you have a properly drafted estate plan. Think about how much those sons who fought over the Cleveland Browns jacket paid in legal fees. Had their father prepared an estate plan, such an expensive, stressful, and petty lawsuit could have been avoided.
If you would like further information about estate planning, please contact us for a no-cost initial consultation. firstname.lastname@example.org
1. If something happened to you (or your spouse) tomorrow, would your existing estate planning documents ensure that your affairs would be handled in the manner you desire and by the person or institution you desire? Have your Will, Durable Power Of Attorney, and Healthcare Proxy been reviewed or updated in the past three years?
2. If you own assets in more than one state, do you have a Revocable Living Trust? Without one, your estate may be subject to probate in more than one jurisdiction. That can be time consuming and expensive, disrupt the flow of any business operations, and impede the transfer of your assets to your beneficiaries.
3. Has there been a birth, death, marriage or divorce, or falling out in your family recently? If so, have you reviewed your estate planning documents to see if any changes need to be made? If you have children, consider:
- Who will take care of your minor children should you and your spouse are both become unable to do so?
- Who will have control of your assets for your children’s benefit?
- Should your children get control at age 18? Age 21? Age 23 or 25?
4. Do you own an interest in a business? If so, how have you planned for the succession of the business control and operation if something happens to you or your co-owners?
5. If you have retirement plans or deferred compensation plans, do you have copies of the designated beneficiary forms? Have you considered both the income tax and the estate tax consequences when you die?
If you’d like more information about protecting your family and finances, contact us for a no-cost initial consultation. email@example.com