You’ve likely heard a lot about estate planning, but do you know why it’s so important — both for you and for your family?
When it’s done right, estate planning is vital for peace of mind knowing that you have things planned out properly and that your family has what it needs should the unexpected occur. While the passing of a loved one is always difficult and stressful, a proper estate plan can protect your legacy and greatly simplify the process by helping your family avoid time in court, avoiding infighting, and minimize delays and costs.
What is an Estate Plan?
An estate plan guides the courts and your heirs as to how you want your estate dealt with after your death or upon incapacitation. It’s a legal structure for the management and future disposition of your current and future assets. An estate plan provides legal access and instructions to someone you designate to step in for you if/when something happens.
Estate plans are not only for the elderly or infirm. If you have a family, own a Business, or have Real Property, you need to plan for the unexpected accident or health emergency … and keep those plans up-to-date throughout your lifetime.
What is the Purpose of an Estate Plan?
The goals of an estate plan are to . . .
- Maintain control of your assets,
- Decide who steps in and represents your interests,
- Avoid court proceedings,
- Avoid unnecessary delays,
- Avoid unnecessary expenses and taxes.
Have a Plan
Having no estate plan is the biggest mistake people make. No plan means your estate defaults to using the government’s plan, which leaves everything up to the probate courts. Probate is a very costly and lengthy process that takes 18 to 24 months on average if everything goes smoothly (and it rarely does). Probate is also very public. Where you bank, your bank account numbers, and even your balances become public record. It is also very expensive! Probate Fees average between $25,000.00 to $50,000.00. However, this is entirely avoidable with the proper Estate Planning documents in place.
More than a Just a Will
Estate planning requires more than just a Will. A Will is essentially a set of instructions for a judge to follow. That means probate court and we want to avoid the courts and the costs. Probate fees are generally determined based on a percent of estate value, often ranging from 2% to 8%. With a properly drafted and funded Trust, the need for probate can be avoided.
Keep It Up to Date
A birth, death, marriage, divorce, move, property purchase or sale, and other life events can affect your estate plans, especially Trusts. Failure to review estate plans and update as needed when such events take place often result in beneficiaries being left out (or left in), which can lead to costly court proceedings, especially when families split or join due to divorce or remarriage.
Keep It Formal
While we’d all like to live in a world where a handshake or verbal promise is all it takes, informal planning is rarely, if ever, honored by the courts. The approach of “I told my kids what I want to have happen” simply does not work. Similarly, DIY estate planning through online venues frequently fails to withstand court scrutiny. Often, DIY plans are too vague or confusing to address specific situations, even when the intent is well-known to the family.
If it all sounds a bit confusing and complicated, you’ve got company. Everyone is bound to have questions about estate planning, and Shoup Legal can help. We are experts at helping our clients secure their assets and protect their heirs. Contact us at 951-445-4114 or through our website at www.ShoupLegal.com to discuss your unique situation today.