By Christina Lynn
Your Estate Plan Says A Lot About You
Are you a planner? Are you organized? How well are you prepared for the future? Do you have safeguards in place for emergencies? Who will take over for you if something happens to you? Is that plan formalized? What kind of legacy are you leaving behind?
These uncomfortable questions funnel down to one simple question: what does your estate plan look like?
No matter how you answer that question, it’s worth a simple review.
The Average American Should Have an Estate Plan
Well, you’re right that the average American doesn’t need to worry about estate tax. However, estate planning isn’t just for the rich and famous. Federally, unless your net worth is over $11.2 million, the federal estate tax won’t apply to you. Although some states have lower thresholds, which would affect more people. However, just because you may not have to pay estate tax, that doesn’t mean that you shouldn’t do some basic estate planning.
Check out these seven benefits of estate planning:
1st Benefit: Easy Transition
The first benefit to estate planning is for your family’s easy transition after your death. If you have all your financial ducks in a row, neatly organized in binder, your family will be so grateful. The last thing your loved ones want to deal with when you pass away is chasing down bank account numbers and forgotten about investment accounts. Don’t make them deal with trying to figure out your passwords, account numbers, investment institutions, contact info. Do you even know where it all is? Is it buried in a combination of paperwork, emails, websites, file folders, and safe deposit boxes? How do you expect someone to come in and sort out that mess?
Estate planning can be as simple as putting together a binder of all your assets and their corresponding paperwork, important information, powers of attorney, and directions where to locate your will.
2nd Benefit: Minimize Expenses
The second benefit of estate planning is the minimization of after-death expenses. With minimal estate planning leg work, you can properly name beneficiaries to accounts, which will avoid probate. Avoiding probate for as many assets as possible will minimize after-death expenses.
If you own property in multiple states, your estate will have to go through probate in each respective state. The probate costs add up quickly. You can avoid that through the use of trusts.
If you blessed with a large net worth, you may need to plan for state or federal estate tax. Your estate planning attorney can help you come up with creative ways to minimize or avoid estate tax.
3rd Benefit: Avoid Family Drama
Is your family famous for it’s fights? It seems like every family has their fair share of complicated relationships. The third benefit to estate planning is that it can help avoid or minimize the potential crazy drama that is bound to happen when you pass away. A death in the family brings out the selfish side in people.
If you foresee your spouse, children, step children, ex-wife, siblings or other relatives fighting for control or money after you pass away, estate planning can help significantly. This type of planning is more costly, but it is worth every penny if it can save your family from fracturing after you are gone. For example, the use of trusts can help prevent arguments between family members by shielding the details in privacy where only the executor knows the full picture.
Unfortunately, death brings out the worst in people in its aftermath of estate settlements. I have seen families torn apart by minimal amounts of money. Don’t let that happen to your family. Avoid family drama by setting proactively estate planning.
4th Benefit: Control Heirs’ Spending
If your spouse or heirs are not good with money, you may want to control how your money is spent, after you aren’t around to be in charge anymore. For example, if your spouse is altogether lovely, but spends money like it’s going out of style, trusts can be set up to provide for your spouse without risking the loss of your financial legacy.Your estate planning attorney can help you set up a trust that you can set the controls on. You can determine now, how your money will be spent when you’re gone.
5th Benefit: Mitigate a Blended Family
If you are remarried and are concerned that your children may not be treated fairly after you pass away, trusts can help with this situation. Managing the estate of a blended family is a delicate endeavor, but can be done seamlessly with the right estate planning. This type of estate planning will require a knowledgeable estate planning attorney. It may cost more to set up a trust for this type of situation, but it will be worth it to keep your family in peace with each other.
6th Benefit: Privacy
I asked my estate planning attorney friend when she would recommend setting up a trust (revocable living trust) versus just relying on a will. She said the primary factor for her is privacy. If her clients don’t want their financial information to be aired out for the public to see (business competitors, arch enemy, or bickering siblings), then a trust is the way to go.
7th Benefit: Your Pets
If your pet is your “baby”, the only way to make sure they will be taken care of according to your wishes, is in a pet trust.
How Much Will It Cost?
Regardless of how much money you have, estate planning is totally worth the effort. I think of estate planning of operating on a sliding scale. The more simple your financial world is, the less estate planning you need to do. For example, if you own a house, a few investment accounts, and your children are adults, your estate planning will be fairly simple. The more real estate you own, businesses you have interest in, and the less your family gets along, the more estate planning you should be doing.
Estate planning for the simple cases can be very affordable. If your financial world is simple, estate planning will be inexpensive. For me to set up a will and testamentary trust, it cost $750. Yours could cost less.
If your financial world is complicated (lots of assets and/or a family that is prone to fighting), your estate planning could cost as little as $2000 or as expensive as $20,000.
Regardless of how much it costs you, it is worth the investment. It’s a final parting gift of organization and an act of caring to your family and friends.
Why South Dakota Is the Best Place To Create a Trust
Little ole’ South Dakota is famous for Mount Rushmore, and you guessed it, trusts!
Every state has their own state laws regarding trusts, and South Dakota happens to be a haven for trust-favorable laws. The rich and famous fly in from across the country to meet with our estate planning attorneys. So, if you are interested in pet trusts or Dynasty trusts, South Dakota is worth looking into.
Go get your ducks in a row. High five.