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Estate Planning Is Not Just for the Wealthy

The blog, news and resources of Bieser Greer

November 11, 2016

Estate Planning Is Not Just for the Wealthy


Given changes to federal estate tax laws in recent years, under which only estates valued in excess of $5.45 million for individuals and $10.9 million for married couples are subject to the federal estate tax, some people may not see estate planning as something that is relevant to them.  Although tax planning is certainly one reason for putting in place an estate plan, it is far from the only one.  Having an estate plan in place is beneficial for both the rich and the not-so-rich.  Below are just ten of many reasons why you should consider having an estate plan:

  1. Probate Avoidance.  You may have heard friends or advisers talk about “avoiding probate” without exactly knowing what that term means.  Although probate is not the end of the world as some might have you believe, it should be avoided to the extent it is easy and makes sense to do so.  Generally speaking, assets that are “probate assets” must pass through a court process before they can be distributed to the beneficiaries of your estate, which can be an expensive and drawn-out ordeal.  “Non-probate” assets are those assets that have been set-up (through beneficiary designations, trusts, etc.) to pass to a beneficiary outside of the probate court process.  Understanding these concepts and knowing what options may be available to easily take assets, such as your home, out of probate is a very important part of the estate planning process.
  2. Naming an Executor or Trustee.  Whether with a Will or a Trust, you have the opportunity to pick who you want to be in charge of handling your affairs after you die.  Without an estate plan in place, a court will have no guidance from you in deciding who you would trust with the responsibility in serving in these important roles.
  3. Efficiency.  You will want your fiduciary to have the flexibility to run your estate efficiently, and through your Will or Trust you can grant your fiduciary many powers to make the job easier.  Without an estate plan in place, many additional steps in the estate administration process would require the court’s formal approval before the fiduciary can take action.
  4. Guardian of Your Children.  Through your estate plan you have the opportunity to nominate who you want to be the guardian of your minor children and who you trust to hold and spend funds on behalf of your minor children.  Without anything in place, a court will have no guidance from you in deciding who should serve in this role, which could lead to an ugly dispute between family members over who should be trusted with this important responsibility.  An estate plan also offers you the opportunity to state your wishes as to how your children should be raised on such important issues as religion and education.
  5. Controlling Who Receives an Inheritance.  If you die without an estate plan in place, your estate will be controlled and distributed in accordance with a statutory “family tree” of priority.  Perhaps, however, you wish to make a gift to a sibling, friend, or charity.  Or perhaps you have stepchildren you would like to receive an inheritance.  Or perhaps you have someone you specifically do not want to receive an inheritance.  Without a plan in place, you have given up control of these decisions.
  6. Controlling Ages of Distribution.  You may feel your 18-year-old is not yet responsible enough to be trusted with an outright inheritance, but you still want those assets to be available under supervision for his or her benefit.  The right estate plan can achieve this goal.
  7. Special Needs Children.  Without an estate plan, a child with special needs receiving an inheritance risks becoming disqualified from certain government assistance programs.  With the right estate plan, an inheritance can be set aside for the benefit of that child without risking the loss of this assistance.
  8. Taxes. Yes, very few people currently have to worry about the federal estate tax in 2016, but the issue has been in constant flux now for many years.  As recently as 2001, any amount in your estate over just $675,000 was subject to estate tax, with a top tax rate of 55%.  It is not unthinkable in the right political environment that this could come back down at some point.  The right estate plan can be flexible enough to spring into action if necessary to adjust to changes in the estate tax.
  9. It’s Not Just Your Will.  The typical estate plan package includes more documents than just your Will or Trust, and those documents are arguably just as important.  A Power of Attorney is the document through which you grant an agent the authority to act on your behalf in legal or financial matters.  Without this document, if you were to become incapacitated, the only way someone could access your accounts, sign contracts, or conduct other business on your behalf would be by getting appointed as your guardian through the probate court, which is a tedious and expensive process.  Similarly, a Healthcare Power of Attorney is the document through which you grant an agent the authority to make healthcare decisions on your behalf if you are unable to make them for yourself.
  10. Peace of Mind.  In addition to the reasons stated above (and many other unstated reasons), a great reason for putting in place your estate plan is to offer you and your loved ones peace of mind.  Without an estate plan that clearly states your wishes and allows for the efficient administration of your assets and affairs, family fights can arise and you place loved ones in potentially stressful situations.  By putting in place the right estate plan, you have the comfort knowing that not only will your wishes be honored but that you are helping alleviate burdens on those closest to you.

* This is an advertisement. The information provided here is for informational purposes only and should not be considered legal advice. You should consult an attorney for legal advice regarding your particular situation.