Many people think only the very wealth need an estate plan. They think if I’m not rich I don’t need one, but really an estate is a fancy word for everything you own. Whether it’s a lot or a little everyone has things that accumulate. No matter how small or large it is, you can’t take it with you when you die, you need to do something with it. The question is do you want to control how things are given, to whom they are given, including the organizations you care about most? Or are you going to leave it to the government to handle?
What is estate planning? Making a plan in advance and naming who you want to receive the things you own after you die.
Myth: Estate planning is only for the elderly. It would be nice to know when we die so we can plan accordingly but unfortunately, it’s not just the elderly that pass away, it’s all ages.
Myth: Estate planning is only for the wealthy. Like we already covered that is not the case.’
If you don’t make a plan at all, the government has created a plan for you. You might not like it or know about it and it may be completely different than what you want, but it is a plan. We don’t just let people’s things sit in limbo forever. There are statutes that say who gets what. The problem is it could get costly, you have to get courts and lawyers involved and it may not end up how you would like.
There is an option called a Last Will and Testament. This document provides instructions, but it does not avoid probate. You still need to get lawyers involved, go to court and get someone appointed as a Personal Representative, who is going to handle the distributions of your assets. So, it’s a step in the right direction but you still have to deal with probate.
Probate can take nine months to two years or even longer. It is open to the public and you are putting this burden on your family because you didn’t make a plan while you were alive.
A Revocable Trust is a written document that determines how your assets will be handled when you die. You appoint a trustee and you don’t need to go court or get lawyers involved. The Trustee just follows your instructions and if you titled your assets correctly it is a pretty seamless process. But what many people don’t understand is that you can make changes during the course of your life.
Cost. A lot of people want to know which is less expensive, a will or a trust. But it all depends on whether you are talking about the cost to you or to your family members. Certainly, doing nothing is the cheapest way to go for you. A will is the next least expensive, leaving the Trust to be the most expensive to you. However, if you look at it from a more realistic standpoint you’re actually saving your family time and money by doing the Trust.
The reality is that it will likely cost your estate two to three times more to have the court involved in the administration than you would actually pay an attorney to establish a Trust while you are alive. Relying on just a will places greater burden on your family members. You want to make it as easy as possible.
It is really a gift from you to your family when you take care of your estate in advance.
Is it time to make your estate plan? If you have made one, does it need to be updated? It’s definitely worth discussing. Big life events that should make you think of updating your trust would be, when you move, divorce, a marriage, when you have children, and when your children aren’t minors anymore. There are many events that you may want to think about when updating your estate plan.
There are other elements to estate planning as well. For example, we really recommend having a Health Care Power of Attorney that allows someone to make medical decisions on your behalf. All these elements including what happens to you when you pass away are really important for you to express now so it’s effective when you need it.
Let us know if we can be helpful. We have attorneys that are ready to assist when you need to consider what’s best for you and your family.