The next few decades will see a tremendous transfer of wealth from one generation to the next and then to the next. It is important to have an estate plan to make sure that everything goes smoothly within your family.
In the next few years an extraordinary amount of wealth is expected to be transferred to the Baby Boomer generation by their parents. It is then expected that the Baby Boomers will be retiring in ever greater numbers and passing that wealth on to their children as Huffington Post Canada discusses in “Estate Planning For A Significant Demographic Shift.”
While the article is about Canada, the exact same shift is going to occur in the U.S.
This demographic shift and the transfer of wealth it will bring makes estate planning more important than it has even been at any previous point in human history. Americans are more prosperous than any other people in history. Billions of dollars’ worth of real estate and financial instruments will be changing hands between generations.
Families that have not planned regarding how that generational transfer will occur risk losing a lot of wealth, if not all their wealth, as the legal system sorts out who gets what. In Maryland, in 2016, if you leave more than $2 million to your heirs, without estate planning, you will pay estate taxes on every dollar over that threshold. And the $2 million includes the total value of your home, regardless of your mortgage. With the cost of housing, life insurance policies or retirement accounts easily could make you eligible forMaryland estate taxes. Your children may have to sell the family home you leave without careful estate planning. To learn strategies for leaving more to your children and less to Maryland estate taxes contact my office.
Since you know the transfer of wealth will occur, make plans for it. Decide now how your assets will be transferred to your children and other heirs.
Planning for it will take a lot less time and cost a lot less money than not planning for it and letting the next generation sort it out with the assistance of probate courts.
Reference: Huffington Post Canada (July 11, 2016) “Estate Planning For A Significant Demographic Shift”
Adults who have never been married and who do not have children often think that they do not need estate plans, especially if they are not wealthy. However, estate planning is for everyone, and even lifelong singles can benefit from having an estate plan.
A common misconception is that if you are a single adult with no children, you will not need an estate plan.
Recently, the NWI Times wrote about one such case in “Single childless adults need to plan too.”
As the article points out, if such a person passes away without an estate plan, his or her assets will go to the closest living relative. That means if either parent is still alive, then the parent will get everything.
For some this default approach might be acceptable, but others will want estate plans so their possessions can be inherited by friends or other family members.
Power of Attorney – Maryland
Estate planning is also not only about what happens to your possessions after you pass away. One of the most important aspects of estate planning is determining who handles your affairs if you become incapacitated and are unable to handle them yourself.
You need a general durable power of attorney in Maryland so someone can handle your financial affairs and a health care power of attorney in Maryland so someone can make any necessary health care decisions. Because you are an adult, your parents will not have an automatic right to help you and handle everything.
Thinking about death is not enjoyable, but just because you do not have a spouse or a child does not mean you do not need to think about it at least long enough to get an estate plan.
Reference: NWI Times (July 17, 2016) “Single childless adults need to plan too”
Some people wonder what time of year is the best time for them to get estate plans. There are several possible answers.
At first glance it might seem like an odd question, but it is one that gets asked with some frequency: What is the best time of year to plan for my estate?
The simplest and probably best answer to that question is that the best time to plan for your estate is whenever estate planning is on your mind. If you are thinking about getting an estate plan, then you should do so no matter what time of year it is.
As the Lowell Sun points out in “Summertime is right time for estate planning,” other answers are also possible.
The article suggests that getting an estate plan in the summer is good because many estate planning attorneys also handle real estate transactions. The summer is generally a slow period for real estate, so attorneys might have more time to focus on your estate plan.
That is all true, but many attorneys only do estate planning and elder law so the advice might not be applicable for the attorney you want to use.
Getting an estate plan when you do your taxes is also considered to be a good time of year since you will already have many of your financial documents easily accessible.
The best answer, however, is still the first.
If you are thinking about getting an estate plan, do not worry about what time of year is best to get one.
Get an estate plan as soon as you think about getting one.
Reference: Lowell Sun (July 17, 2016) “Summertime is right time for estate planning”