Top Five Estate Concerns and Death & Disputes
Top Five Estate Concerns
If you think estate planning is for the wealthy, think again. Everyone has an estate worth planning; some are just more complex than others. Facing your own mortality can be uncomfortable, but ignoring the inevitable can cause unnecessary pain and conflict for your loved ones. In this article, we’ll review the top five concerns when considering your estate plan.
#1 Incapacity Issues
If you became incapacitated, who would make decisions on your behalf? If you’re married, you’d probably guess your spouse. If you’re at least eighteen years of age and living at home, you’d probably say your parents. Both answers are incorrect.
On your 18th birthday, you are considered an adult responsible for your own decisions. Whether married or single, you must appoint agents through proper Durable Powers Of Attorney to make personal, health care and financial decisions on your behalf in the event of incapacity. Alternatively, a court process involving at least three lawyers is required to appoint agents to make such decisions for you under the ongoing supervision of the court. This can be expensive and invasive of your privacy.
#2 Minor Children Matters
Consider how you’d feel upon hearing the story of children abandoned by their parents. After the shock, you might reflect on how much you love your own children. You nurture them. You impart morals and values. You search for just the right babysitter. However, if you die prematurely without a plan in place, your children will be in the same predicament – orphaned, with their fate determined by the court.
In some states, you can appoint guardians for your minor children only through a Last Will & Testament. Without this, an expensive and public court process is required to appoint them. Moreover, the court may not designate the same parties you would have selected.
#3 Death & Taxes
When it comes to transferring possessions upon your death, you can either make it easy on loved ones through proper estate planning, or you can leave it up to the court system. Prior planning is the more efficient and effective option. There are a variety of planning methods to accomplish this transfer. For example, Revocable Living Trusts are commonly used to transfer assets after death, independent of the legal system in many states.
It is settled law that no taxpayer should pay more than his or her fair share in taxes. That said, proper estate planning can save thousands of dollars from unnecessary federal estate taxes. If you are married, is your estate plan taking full advantage of your available estate tax exemption through a combination Credit Shelter/QTIP Marital Trust or, perhaps through the new “Portability” alternative?
#4 Inheritance Risks
Leaving an inheritance to provide for your heirs seems like a positive decision. However, the outcome may be far from what you intended if you haven’t considered the potential risks. What if that inheritance were squandered by a shortsighted eighteen-year-old on an expensive sports car, leaving the heir broke but fashionable? What about money left to a previously happy couple now engaged in a bitter divorce? What would happen if the heir were involved in a lawsuit or bankruptcy? Proper planning through one or more Long-Term Discretionary Trusts will protect and preserve an inheritance for generations to come.
#5 Procrastination Perils
Who wants to take time out from living to think about dying? Any raised hands? Probably not many. Yet each moment you procrastinate in preparing your estate increases the likelihood that those you leave behind will grieve not only your passing but your lack of planning as well. Dying without even a basic will, or with one that is outdated and no longer meets your needs, will tie your loved ones up in legal knots at a most vulnerable time in their lives.