10th Nov 2015
Stop for a moment and think of the most important people in your life. Depending on what stage of life you’re in, these people could include your spouse, children, mother, father, sister, brother or best friend. As difficult as this may be, imagine what life would be like for those individuals if you suddenly died. The people closest to you would obviously be emotionally distraught and have a long road of healing ahead of them. What if on top of that, they had to deal with more?
Unfortunately, this is case for several families when a loved one dies. Statistically, 55% of Americans die without having an estate plan in place. This leaves their loved ones not only dealing with the emotions of their loss but also the confusion and stress of figuring out how to handle the estate.
Every individual has an estate. Your estate consists of everything you own including your car, home, other real estate property, checking and savings account, investments, life insurance, furniture and personal possessions. No matter how small or large your estate is, it doesn’t go with you when you die and someone has to be responsible for managing it.
Although it can be difficult to think about, especially if you’re young, when you die you will want to have a plan in place to ensure your estate is handled properly. Working with a professional to develop an estate plan will guarantee your wishes are carried out, and who receives what, and when.
Identify What’s Important to You
Think of your estate plan as road map for those you leave behind. In addition to distributing your personal assets, think of important information you would want those you leave behind to know. A proper estate plan also includes information such as:
- Instructions for passing along your values (religious, education, etc.) in addition to your valuables
- Instructions for your care if you become disabled or incompetent before you die
- A guardian and inheritance manager for your children if they are minors
- How to provide for family members with special needs
- Providing for loved ones who are financially irresponsible
- Providing for loved ones if they experience divorce or other life altering situations
- Securing life insurance for your family
- Securing disability income insurance for your loved ones if you are unable to work
- Securing long term care insurance if you are in need of extended care
- How to manage your business if you are business owner
- Minimizing taxes, court costs and unnecessary legal fees
Meet with a Lawyer
In order to build a proper estate plan, you need to first find the right estate planning lawyer. It’s important to work with a lawyer who will be personally committed to working with you and show you a high level of devotion and care. This is not an easy topic but working with the right lawyer can make a big difference.
At Tompkins Law, we work with each client to personally design an estate plan. We provide the guidance and assistance in coordinating your asset’s with your plans. We are always available when you need to make amendments and changes to your estate plan and we ensure timely, professional and affordable service. Again, we realize this can be a difficult conversation to have so work a lawyer who makes you feel comfortable and provides practical solutions for your needs.
Establishing a Living Trust
Once you meet with a lawyer, they will guide you through the process of establishing your will or living trust. Living trusts and wills are the primary tools in estate planning and both allow you to decide who receives your money, property and assets after you pass away. Trusts and wills also identify who will manage, settle and distribute your estate after you’re gone.
While both are good options, the primary advantage of a living trust over a will is to avoid probate. Probate is a legal process that takes place after someone dies. It a very timely and costly process for your family. By avoiding probate, you save your family thousands of dollars and a significant amount of stress.
Additionally, living trusts are settled more quickly and allow your family to carry out the estate planning in private. Probate cases are public record and open to anyone for inspection.
Estate Tax Planning
The last thing you want when you pass away is for your loved ones to be left in a tax mess. This is why a proper estate plan should include a strategy for avoiding, deferring and/or minimizing Estate and Gift Taxes. A good plan accomplishes this while also reaching your personal and family goals.
One way to reduce estate taxes is through both charitable and non-charitable gifting. Currently, the IRS states that each person can give up to $14,000 annually to a recipient without being penalized with a gift tax. Another option to reduce taxes is charitable giving. If there is a particular organization or cause that is important to you, you can incorporate a gift to that organization or cause in your estate plan.
The Best Time to Plan Your Estate in Now
Estate planning is not just for older people or individuals who are retired. Estate planning is for everyone. We cannot predict how long we’ll live or if we’ll have an illness or accident. As you know, people experience death and illness at all stages of life. Having a plan in place guarantees your loved ones will be taken care of if something happens to you.
Too many people don’t plan because they think they don’t own enough or they aren’t wealthy enough. Estate planning is not for the wealthy. Estate planning is often times more important for families with modest assets who will need direction and guidance if something happens to you.
It may not seem like the right time to work on your estate plan. You may be too busy, confused or overwhelmed by the process. It’s easy to avoid estate planning but I encourage you to think of your loved ones. Estate planning isn’t just for you, it’s for the people you love.
The early stages of planning and administration are critical. For questions or to schedule a consultation, call the office today at 714-385-0044.