There is a great deal of confusion and mythology regarding estate planning. It’s a subject that healthy, busy people really don’t want to think about. Understandably, the thought of suddenly becoming unable to function (due to disease or a catastrophic illness) and needing to depend upon someone else, along with having to come to grips with the inevitability of death, can really be distressing. However, by taking methodical, concerted action by creating a well-advised estate plan, one can at least confront these unpleasant realities in a rational way.
The following are some examples of erroneous information some people have regarding estate planning:
1. “I don’t have a will and I don’t really own a lot of property, so what’s the problem if I die without one?” You DO have a problem. Without having a witnessed will that is also valid within your state, if you die as a single custodial parent, your surviving minor children run the chance of being taken care of by blood relatives of the probate court’s choosing—not yours. In addition, any remaining financial assets in your name will be evenly distributed to your immediate family members. Without a clear-cut estate plan, your surviving spouse may not have enough of your money to supplement his/her retirement income.
2. “If I become incapacitated, my executor will take care of everything.” WRONG . Your executor is someone you have designated in your will to carry out your wishes after you pass away. If you’re still alive, and find yourself in failing health, your executor can’t help you. With a smart estate plan, you can have a designated trustee, attorney in fact, and advance healthcare agent to act on your behalf.
3. “I don’t need to do any estate planning because I own much less than the federal estate tax exemption.” That’s another fallacy. Don’t mistake estate planning with estate tax planning. Estate planning is about making serious decisions in choosing individuals and effective strategies to benefit your family and/or friends financially. In addition, good estate planning also includes a plan for unexpected illness and old age. This is something EVERYONE needs to do. While most Americans are now exempt from federal estate taxes (whereby the exemption is now set at $5 million dollars), you still may need to plan for your state’s death or inheritance taxes, which typically have a much lower exemption.
It’s a far better idea to address these realities now rather than when the time comes. By taking rational, concerted action by having an effective estate plan in place, many of the above mentioned problems can be avoided. Please call our office at (310) 316-2400 to schedule a free one hour consultation with our estate planning attorney.