Many make the wrong assumption about estate planning. Whether they believe it’s not necessary because the family is close or maybe someone believes he doesn’t have an estate, the reality is, everyone needs an estate plan. Their needs just differ. Here are a few more estate planning truths.
Remember, an estate plan provides directions on how your estate should be divided. It provides clarity and eliminates potential problems.
Probate confusion often comes from different states having different laws. In every state, it can cost money in the form of filing fees, attorney’s fees and other costs. Once you understand the real costs of probate and the real costs of avoiding probate, you’re better prepared to face it.
In general terms, a probate proceeding is opened upon your death to make sure that all of your debts are fully paid and to distribute any remaining assets to the people you have designated in your will. If you did not leave a will, then each state has its own set of rules defining which of your relatives will be entitled to receive your property. Dealing with the potential for probate ahead of time eliminates the drawn out process associated with allowing the courts to decide. If you’re worried about the costs of leaving assets to your heirs, many people opt for a small life insurance policy to be used to cover those costs when the time comes. It can be used for estate taxes or any other costs you anticipate.
Bottom line: avoiding dealing with this issue means certain probate confusion. Acting now eliminates the problems later.
The Government Gets it All Anyway
Another myth associated with estate planning is that the government will find a way to get it all anyway, regardless of any preplanning you do. That’s simply not true.
If you die without a will or trust, the laws of the state you called home just before you died will determine who will receive your assets. In some states, your surviving spouse will receive everything. Remember though, the ones who mean the most to you may not be part of the natural process of survivors. Your assets will generally not go to a live-in significant other, or to stepchildren that you raised like they were your own flesh and blood. The government may not get it, but it’s possible your loved ones won’t either if they’re not in that natural line. The government will pass it down, even if it has to look for a cousin three times removed. One in the rarest cases will the government hold a deceased person’s assets and should someone step forward, the government won’t say, “Too late.”
Again, though, planning today can eliminate problems tomorrow.
Trust Me – You Need a Trust
As estate planning lawyers, we have seen the benefit of trusts in estate planning, but they’re not always right for every client. A solid estate planning lawyer will not encourage a client to put into place documents that don’t serve a purpose for that client. Even clients with fewer assets than the millionaire down the street can have a need for a trust. For example, if he has a disabled child, a trust can ensure the care of the disabled child even if a parent(s) dies. The takeaway is that trusts are a must-have for some, but not all.
Don’t allow the unknown keep you from addressing your future needs. Finding out your options is empowering and you can better prepare for your loved ones’ future needs when you’re armed with the right information.
- Fewer People Have an Estate Plan in Place Than in Years Past - February 16, 2021
- Biden Administration Could Reduce Estate Tax Exclusion - February 1, 2021
- Estate Planning for Singles - January 28, 2021