Five Reasons to Make an Estate Plan
Everyone needs an estate plan, not just the super-wealthy. Estate planning is planning for the orderly distribution of your property to your heirs. But it encompasses much more. Estate planning has five major purposes, one or more of which will surely apply to you. With a good estate plan you can:
Distribution of your Assets on Death. If you die without an estate plan, the state will provide a plan for you. Every state has a law that specifies who gets your property if you die without a will or other documents for passing your property. The law is a “one size fits all” plan that attempts to predict how most people would like their property distributed. Typically, your property would go partly to your spouse with the rest to your children in equal shares. If you don’t have a spouse or children, your property would go to other relatives such as parents or siblings. This plan may not be suitable in many instances. For example, you may want to:
Probate, the court-supervised process of distributing your estate, can be time-consuming and expensive. You can minimize the assets that need to pass through probate or eliminate probate altogether by using certain devices such as:
Providing for Minor Children If you have minor children you will want to name a guardian to care for them in the event of your death. Although a court will need to appoint the guardian, most courts will follow your wishes in the absence of a compelling reason not to. Minors can’t be given property outright. You will need to designate someone to manage your children’s property until they are adults and able to manage it themselves.
Preparing for Your Incapacity In your estate planning documents, you can designate someone to manage your financial affairs should you become unable to do so. You can also specify how your incapacity is to be established. With the proper documents in place, you will save your family the expense and stress of having to go to court to get a guardianship.
You can designate a person to make medical decisions for you when you no longer can. And you can provide written guidelines for that person as to what type of end of life treatment you want.
Reducing Estate Taxes Most people will not owe federal estate taxes. In fact, more than 99.9 percent of all estates are not subject to the federal estate tax. But if you expect your estate to be worth more than around $11 million, you will want to meet with an estate planning attorney to discuss strategies for minimizing your estate taxes. These may involve making gifts while you are alive and establishing various trusts.
If you have questions about estate planning or are ready to begin work on your estate plan, please call us. We will guide you through the process of developing your estate plan and help you take advantage of the best estate planning tools for your situation.
Can You Prepare Your Own Estate Plan?
The prevalence of do-it-yourself options for drafting estate planning documents leads many people to wonder whether they can prepare their own estate plans. For all but the simplest estates, however, writing your own estate plan is not a good idea. Estate planning is not a one size fits all model.
These do-it-yourself forms, whether found in books or online, are generated by estate planning computer software that is designed to cover only the most basic of estate planning needs. Even books and programs about estate planning recommend that you seek the expertise of an experienced estate planning attorney.
Self-drafted estate planning documents are notorious for mistakes. Some common problems include:
While the future is uncertain, you can rest easy knowing that your loved ones and the causes you care about will be taken care of with a comprehensive estate plan.