- “I don’t have an estate of any significant size to have an estate plan.”
Your estate can grow. Many aspects of a good estate plan such as Powers of Attorney and Living Wills have no relation to the size of an estate.
- “I have a Will so my estate planning is complete.”
There may be a better way. Wills start in the Probate system which makes a Will public record and open to contestation. Children can have their inheritance at age 18, and may be too young to manage it well. A Will is the instrument only for distribution after your death of your estate to your heirs distributed by an executor. In case you become incapacitated, there is no protection from an appointment of a conservator who would then manage your estate.
A Trust can help. It is a private plan whereby you can manage your assets as a Trustee. A Successor Trustee manages and distributes your estate. In case of an incapacity, there is no conservator needed, as the Successor Trustee can help manage the estate.
- “My estate isn’t big enough to pay estate taxes.”
A Trust isn’t set up only to eliminate estate taxes. It also eliminates other taxes such as most capital gains, gift, and state estate taxes that even small estates have.
- “A Trust is too expensive.”
Weigh the value. It’s true, Wills are less expensive than Trusts. Contrast that with 3%-10% shrinkage of your estate after your Will goes through the Probate System. Furthermore, a conservatorship for incapacity can easily take 3%-5% of your estate.
Therefore, if no estate planning is done, 6%-15% of your estate is gone before your heirs receive anything. In some cases, contestation of a Will with much time and money involved in the Probate system could end up taking the complete value of the estate!
- “I am too young.”
It is not about age, but circumstances. If you have family responsibilities and plans for your money after you are gone, you will need a Will to appoint guardians for your children’s care and determine who will distribute your estate.
Passing away without a Will leaves the state as your executor. Your state’s plan could very easily be different from your plans. For example, some state laws won’t pass 100% of an estate to a spouse. The living spouse could receive 50% and the children the other 50%. It is important to ensure that your wishes are known and carried out in the manner you choose.
