- July 7, 2020
- Posted by: Michael Gunning
- Category: Estate Planning
It’s All About Protecting Your Loved Ones
It seems as though most folks these days are busy planning their next vacation, which car they want to purchase next, or even where they’ll be eating dinner tonight, at least more than they seem care about their estate plans —but we would caution you against putting this off for much longer!
Now, we’ll admit that estate planning may not be as much fun to think about as booking a vacation, or checking out those restaurant reviews on Yelp, but without a solid estate plan – you’re actually giving up your ability to choose who gets your assets once you’re no longer with us. Most people have a couple family members that they would certainly not want to see their assets given to, which can and will happen without the appropriate plans in place. It’s not uncommon to want your assets to go to someone who you feel deserves them, and we can help you make sure that this process is done correctly so you can sleep soundly at night knowing your situation is taken care of.
Estate planning isn’t just for the rich anymore! Without these important plans in place, settling your financial affairs after you pass on could have a protracted (and costly) impact on your loved ones own financial life, and this can occur even if you don’t have a fancy home, retirement accounts, or valuable precious metals or art.
Still not convinced that an estate plan is necessary for you? At least try to consider these four reasons why you should create one, so that you can avoid these potentially destructive outcomes for your own heirs.
- Estate planning will allow you to decide who gets what.
- An estate plan will afford you an opportunity to name a child’s guardian in the event that a parent is taken far too soon.
- Estate planning will reduce the taxes on assets you leave behind.
- An estate plan can minimize the likelihood of family fights and downright ugly legal disputes.
1st – Estate Plans Protect Your Beneficiaries
Estate plans were once considered an item that only high net worth individuals cared about, but as of 2020 this has all changed dramatically.
These days, even middle-class families have a need for deciding how to plan for an occasion where something happens to the family’s main breadwinner (or breadwinners). In the end, you don’t have to be super-rich to do well in the stock market or even buy real estate, both of which are tangible assets that most folks would like to pass on to their heirs.
Even if you only intend to leave a second home behind, if you don’t decide ahead of time who will receive the property when you pass away, you aren’t going to be able to control who becomes the property owner.
The main component of estate planning is to designate your intended heirs for all of your assets, whether that takes the form of a summer cottage or a hefty stock portfolio. Without establishing your estate plan, a court is going to be the one to decide who receives your assets, and unfortunately this process can drag on for years, rack up expensive attorney fees, and things can even turn ugly. You must realize, a court can’t ascertain which sibling has been “the responsible one” and which one probably shouldn’t have access to a large amount of cash. A court will almost never automatically rule that a surviving spouse gets everything either so you should not just assume this will be the case.
If you do die without a will, just remember it will be the courts who will decide who receives your assets.
2nd – You Can Protect Your Young Children
Nobody wants to prepare for dying young, but if you’re the parent of small children, you should probably prepare for the unthinkable. If you haven’t already decided, imagine what could happen to your kids if you pass away tomorrow. Will they be cared for by someone you trust? If not, a will can help ensure that your children end up with a trusted family member, vs ending up with a distant family member who is connected only by relation.
To ensure that your children will be cared for in the manner you approve of, it’s important that you name a legal guardian, in the event that both parents die before the children turn 18. Without this clause in your will, a court will again step in. However, this time it won’t be to determine who gets a piece of real estate or artwork; this decision will dictate who will raise your children in your absence.
3rd – Spare Your Heirs a Huge Tax Liability
Estate planning should be all about protecting your loved ones when you leave them, which also means giving them protection from the IRS.
One essential portion of estate planning is the transfer of assets to heirs, which we believe should always be done with an eye toward creating a minimal tax burden for them.
4th – Get Rid of Squabbling in Your Family
We’ve all heard the horror stories in the news. A famous individual with a pile of money dies and the outright war between family members begins. Often one sibling may believe that they deserve a larger share of the inheritance than another, or perhaps one sibling thinks that they should control the finances even though they’re well known throughout the family as having mountains of personal debt themselves. It’s this kind of petty squabbling that can get nasty and may end up in court, with family members looking at each other from opposite sides of the ring.
We can’t tell you how important it is to try and put these fires out before they ever have a chance to start. This enables you to choose who will get control of your finances and assets if either you or your spouse becomes mentally incapacitated or dies, and will go a long way toward calming any family conflict, while ensuring that your assets are handled in the way that you want them to be distributed.
Deciding whether to divide your estate exactly equally is one of the more common problems face but is one of the tasks that we recommend you think through. If you’ve had more than one spouse or you have children from more than one family, an estate plan may make even more sense as you can see how tangled these circumstances can get if you have been married more than once!
It all comes down to whether you would like to decide what happens to your assets when you pass, and the duty you feel to keep your loved ones protected – when you can no longer do it for them.
Without this critical document, you will be putting your heirs at risk of massive a tax burden, and the courts are going to be the ones to designate exactly how your assets are divided – and perhaps the most concerning thought for many parents – who will raise your children.
If these thoughts concern you, please contact our office so we can establish the type of estate plan that works best for your family. Call our office at 509-328-2150 to discuss how we can help or visit our contact page for more information.
Looking for additional resources related to estate planning? NAELA (National Academy of Elder Law Attorneys) offers many articles to help you figure out this complicated process.