The federal estate tax might soon be a thing of the past. That does not mean that you will no longer need a will.
On January 20, 2017, the Republican Party will control the Presidency, the Senate and the House of Representatives. The party will quickly act on its long-stated goal of eliminating the federal estate tax.
If it does so, do not be tempted to think that you no longer need an estate plan. There are reasons to get one that have nothing to do with avoiding the estate tax.
At the very least, you still want to have a will as Forbes discusses in "Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!"
The reasons include:
- In a will, you appoint an executor who is in charge of administering your affairs. The executor can make sure that all of your debts are paid and that your assets are handled appropriately.
- If you have minor children, a will is used to designate who you want to have guardianship of those children in case something happens to you.
- In a will, you can give specific bequests to people. That means if you want one of your children to have a specific piece of personal property for sentimental reasons, a will is the place that you do that.
- While getting a will you can also get advanced medical directives that will determine how you should be cared for, if you are incapacitated and not able to communicate with doctors at the time.
- A will is more efficient than allowing the courts to handle your affairs without your directions. Having a will is cheaper and faster than going to court. It also protects your estate by making sure that your property does not go to people you do not want to have it.
Reference: Forbes (Dec. 8, 2016) "Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!"
Do not be confused about what estate planning is and whether or not you need to do it.
Most Americans do not have estate plans. One of the reasons that they don’t is confusion about what getting an estate plan means and who should have them. The term "estate" often conjures up images of the palatial estates of the ultra-wealthy. However, the term applies to the property of anyone who passes away.
We all have estates. For that reason, it is important to know what estate planning actually does.
Recently, the Vail Daily discussed some basics in "Estate Planning."
If an estate is the property you have when you pass away, then estate planning is deciding what should happen to that property. It is you deciding beforehand who you want to have your property and the legal means by which they will receive it.
The two most common methods to have your property distributed are through wills and trusts.
A will is a legal document that is submitted to a court. The will sets out who should receive what. If the will is valid, the court will oversee the process of making sure that the property goes where you want it to.
A trust creates a new legal entity to hold and distribute property. It is not normally submitted to a court, unless it is a “testamentary” trust created under a will to manage the estate distribution. Another person known as a trustee, is charged with making sure that your directions are followed.
There are other aspects of estate planning you should address, including planning for your own end-of-life care. Visit an estate planning attorney if you have questions about wills, trusts, or any other aspects of estate planning. Profit Law Firm works with clients to find their goals and wishes and create plans that implement their desires.
Reference: Vail Daily (Dec. 8, 2016) "Estate Planning."
Who you name as the beneficiaries of your retirement accounts and your life insurance policies, is an important part of modern estate planning. Knowing when to change them is vital.
Estate planning today is not just about going to an estate attorney to have a will or a trust drawn up. It also includes making plans for your own end-of-life care and deciding who should get your retirement accounts and life insurance policies, if something happens to you.
The beneficiaries of your accounts will get the assets by operation of law, regardless of what the will says. If you have done everything correctly, then you have factored those accounts into your overall estate plan with the assistance of your estate planning attorney. Sometimes you need to review and change those designations. Profit Law Firm can help you understand how each asset will pass to the next generation and ensure that your overall goals are met with careful oversight of your beneficiary designations and careful will drafting. Schedule a consultation today.
Recently, the Aiken Standard listed some appropriate times to do that in “On the Money: Don’t disinherit your loved ones,” including:
- If you get divorced or remarried, then review your accounts to make sure you are not leaving things to an ex-spouse or that your new spouse is included.
- If you get a new employer and roll over your old account, then make sure that the new account accurately reflects your wishes.
- If the primary beneficiary on your accounts passes away, then you obviously need to make changes.
- If the financial institutions you have the accounts with change ownership, review your beneficiary designations to make sure the new company has everything recorded properly.
- If you have a new child or grandchild, consult your estate attorney about including them and whether they should be named as beneficiaries.
- If a beneficiary becomes disabled, you should talk to an attorney about creating a special needs trust. Keeping them as a beneficiary could make them ineligible for some needed government benefits.
Reference: Aiken Standard (Dec. 10, 2016) “On the Money: Don’t disinherit your loved ones.”
Many people put off estate planning because they mistakenly believe that it will be too difficult and time-consuming.
Younger people delay getting estate plans for all sorts of reasons. Some think that they are too young for it. Some think that they do not have enough assets to bother with it. Others think that it will be too difficult or take too long.
A columnist for The Gleaner put it off because she and her husband could not agree about who would care for their children. She wrote about their experience in "HARDY: No reason to delay estate planning."
The article is instructive and enlightening. The writer details how once she and her husband did come to an agreement about their children, the process of getting an estate plan was not as difficult as they thought.
This might be because they took the critical step of going to an estate planning attorney instead of trying to do things for themselves.
The attorney provided the couple with a questionnaire that allowed them to think about things that they had not even considered and make their own decisions about those things. If the couple had tried to create their own estate plans, they likely would have been incomplete because of the things they did not know.
The important lesson to learn from the column is that there really is no reason to delay getting an estate plan. If you go to an estate attorney, the process will be simple and you will get a complete plan.
Reference: The Gleaner (Dec. 10, 2016) "HARDY: No reason to delay estate planning."