I have seen it all too often. "We promise to do what's right, mom.", "We will never fight over the farm.", "I am sure we can all get along." I call shenanigans on those lines. Don't punt on the opportunity to plan and prevent future issues between the next generation. The line that really matters is: "Everybody gets along until mom and dad die." Then who gave who a swirly in 5th grade and who stole whose prom date all get re-litigated in the probate court. If you are a movie fan, one attorney compared the probate process to the One Ring of Power in the Lord of the Rings saga. It makes sense, everybody who gets close to it starts to act a little differently and sometimes not for the best.This can be solved with a solid estate plan. Its starts with thinking about your children in a row boat, all of them. If left in the middle of Volga Lake, would they make it to shore? Add their spouses and answer it again. Many people can instantly identify who gets hit with an oar, who gets tossed overboard and who might just jump out.
Estate planning, which includes documents like wills, trusts, and powers of attorney, is the process of preparing instructions on how to manage your assets after your death. State and federal laws apply to estate planning, and so do taxes. In order to protect your assets, it may be necessary to create legal entities such as limited liability companies (LLCs) or family partnerships. Estate laws change often, buying estate planning services off of the do it yourself sites on internet is a bad idea. It is vital to consult an experienced estate planning attorney, in order to protect your assets and meet the goals of your estate planning process. Your goals will be personal, business and tax oriented. Not all of them will be at the optimum setting, as the three are in constant conflict with one another for your attention, perhaps like your children or grandchildren.
Estate planning allows you to decide what will happen to your assets after your death. It allows you (and your wallet after you are gone) to save time and legal costs, and avoid financial and administrative hassles and family splits. Your estate plan should include vital documents; a will, a power of attorney, a health care power of attorney, and in some cases, a directive on what do with your body.
A power of attorney is a legal document that allows you to give directions to another person, who can then make legally binding decisions if you are unable to do so yourself.
A will is a legal document which provides instructions on how to deal with your property after your death.
In addition, other legal documents such as a health care power of attorney with or without a living will, and a revocable (or "living") trust can help with decisions should you become incapacitated. A revocable trust can take control of your property before you die, allowing you and your family to avoid probate proceedings though sometimes the cost of administering a trust outweigh the benefits.
The basic purpose of estate planning is not simply to distribute property after death, but to reduce inefficiency and taxes throughout the probate process. Most estates are free of federal taxes, and a spouse can leave a surviving spouse an unlimited amount of money free of taxes. All estates over $5.43 million in size will be charged with the federal estate tax at 40%. If you are married, you can double that number. Imagine each person's estate as a grain wagon, when you fill it too full, the corn spills on the ground and you will never get it all cleaned up. The process is similar for estates, the part you never get back is the 40% tax. Better to watch the augur now than use the vacuum later.Estate planning is vital to work towards security and peace of mind for yourself and your family. You should never consider your will a final document. Laws and legal interpretations change, as does your personal, financial, and familial situation.
You should review your estate plan every five years or when you hit one of the Ds or at least every five years.
- Death of a close family member
- Dissociation from a job (i.e. fired or retired)