Goal-Oriented Estate Planning Options
An estate plan is your opportunity to prepare for two major life events: one certain -- your death, and one a possibility -- your incapacity. Each of us already has a default plan provided by state law; however, the default provisions oftentimes fail to recognize your unique needs and goals and fail to maximize the opportunities that the law permits.
A goal-oriented design, by contrast, allows you to reflect on your desires and design a plan for the care and management of you and your loved ones upon your disability and/or death.
Did you know that
of Americans don't have a will or trust in place?
Are you in the 60%?
When it comes to goal-setting, the four most common goals are:
EASING ADMINISTRATION & AVOIDING PROBATE
SUPPORTING LOVED ONES
REDUCING TAXES AND LEGAL FEES
Goal #1: Easing Administration & Avoiding Probate
Dying without an estate plan is messy business. Your loved ones must parse through your assets, oftentimes going through your mail (and now email) to uncover your assets and liabilities and to wind down your affairs. Without a well-designed estate plan, this is time-consuming, stressful, and oftentimes requires court intervention through the probate process.
In some instances, probate administration can be a smooth process; however, it can quickly get expensive if matters are contested, asset holdings are unclear, or close court supervision is required. Due to the expense and public nature of the probate process, many clients desire an estate plan that avoids probate entirely.
Goal #2: Avoiding Guardianship
The Centers for Disease Control and Prevention estimate that approximately 20% of persons living with a disability suffer from serious cognitive disabilities or lack the ability to live independently. From an estate planning standpoint, this presents an opportunity to avoid a guardianship proceeding, which--by default--requires a judicial finding of your incapacity, and involves the court appointing a guardian for you. It's no wonder that many individuals want to keep this aspect of aging private and plan for it instead.
Goal #3: Supporting Loved Ones
If you are married with children, the law by default divides your assets evenly between your spouse and children upon your death. If your children are grown and responsible, this plan may work fine; however, if you have young children, then a guardian will need to be appointed to manage these assets. Worse yet, upon their turning 18, they will have immediate access to these assets. By devising a customized estate plan, you can provide support and mentorship provisions for your children, so no expensive guardianship would be required, and their assets can be well-managed until they are able to manage them themselves.
Goal #4: Reducing Taxes and Legal Fees
By now it should be clear that the default plan is a messy, and thus expensive, plan. Moreover, designing a plan that is cognizant of estate taxes (federal and state), capital gains recognition, and income taxes can result in significant financial savings for your loved ones.