If you listened to the weather forecast before leaving for work and learned that a severe storm was on its way, would you leave the house without a raincoat and umbrella? Now think (although you may not want to) that eventually you will become incapacitated or die. Why would you not prepare with an estate plan? Estate planning isn’t just for the rich - everyone needs to start planning for the future.
A key benefit of an estate plan is its power to minimize the effects of probate — or the process used to prove that a person’s will is valid and to supervise how their estate is handled — as well as its related expenses such as surcharges and court fees.
If you haven’t devised a plan to divide your assets then the government becomes your most favored heir. You don’t want that. The ones who should benefit are your loved ones.
An estate plan also prevents conflicts, which can ensue even among the most close-knit of families. Often, it’s not only about money but also about the sentimental value of assets: who gets the grand piano? And who gets mom’s diamond ring?”
Leaving a legacy entails building, protecting, and transferring wealth with the value intact and according to an individual’s wishes.
The following information is needed in estate planning:
- Property composition – Know what is rightfully yours, and what is communal property;
- Family composition – Know who must and can receive your estate;
- Desires and wishes – Know how much your heirs must have, versus how much can be given to whomsoever you like; and
- Special instructions – Know where you can put all these instructions in mind.
Every state has rules concerning the division of assets (unless those assets are placed in trust, thereby avoiding probate). Intestate succession, on the other hand, takes place when an estate-owner dies without leaving a will. Generally, in this scenario, the relatives nearest in degree exclude the more distant ones, and relatives in the same degree inherit equal shares.
Any assets left in your estate after death are subject to both estate taxes and income taxes. The tax law is complex but currently, and individual’s estate of $11.7 million or less is exempt from estate taxes double that amount for a married couple. And a couple may annually gift $30,000 to an unlimited number of recipients. But, if you are fortunate enough to have a sizable estate, tax avoidance (not evasion!) is a key reason to have an estate plan.
An estate plan should also include financial and health care powers of attorney, advance directives and ideally a family guidance letter outlining your wishes concerning disposition of your assets after death.
Call Agins Law Firm, PLC, PLC/Sun Lakes Estate Planning Advisors at (480) 401-2660 for a free “raincoat and umbrella” consultation.