WHY YOU NEED AN ESTATE PLAN
Civil & Human Rights Elder Law Estate Estate Planning Estate Wills & Probate
Summary: Considerations in favor of creating an estate plan
WHY YOU NEED AN ESTATE PLAN
You may be among the significant number of individuals
who have no estate plan or have only a simple will. Now is the time to consider
changing to a living trust. In many cases, the failure to plan, relative to the
expense to create a trust, will in the
end be more costly.
There are
hidden costs in failing to create a trust, since a trust avoids probate,
prevents court control of assets at incapacity, will give your loved one more control over the distribution of your
estate after you die, and lets you keep control of your assets while you are
living--even if you become incapacitated.
Probate is the
process you get many times when you have no trust or only a will. Probate involves the use of the courts over a
period of one to two years to sees that, when you die, your debts are paid and
your assets are distributed. Probate costs are typically substantially more
than the set up costs for a trust.
Attorney fees and executor fees and other costs must be paid before your
assets can be fully distributed to your heirs. Your loved one may even be faced
with multiple probates if you own property in other states.
Probate takes time, usually 1 to 2 years. During part of
this time, assets are usually frozen so an accurate inventory can be taken.
Assets can be distributed or sold with court and/or executor approval. Even a
family allowance may require court approval.
The probate
process is inherently a public process, so any "interested party" can
check for your assets and your debts. This public airing helps assist disgruntled heirs to contest
your will and can expose your family to unscrupulous solicitors. Your loved one
lose a substantial degree of control
A will,
unlike a trust, provides no protection
if you become physically or mentally incapacitated. If you or your loved one
become disabled, due to Alzheimer's,
stroke, heart attack, you may find the court taking
control of your assets before you die through a court appointee
This public
process can be costly, time consuming overly complicated, difficult to end if you recover, and does not
replace the need for probate at death.
Most individuals believe they have
the perfect solution by holding property in joint tenancy. How
ever, joint
tenancy does not avoid probate but merely postpones it, since when one owner
dies, full ownership does transfer to the surviving owner without probate.
Other
problems ensue when you hold property in joint tenancy. With a joint owner, you
face such unpleasant realities as the joint owner naming other joint owners and
increase your chances of being named in a lawsuit and of losing the asset to a
creditor. Joint tenancy is also not a wise choice for tax reasons.
Another popular misconception is that you
need only a power of attorney to handle your affairs. A durable power of
attorney lets you name someone to manage your financial affairs if you are
unable to do so. A separate power of attorney for heath care decision may also
be prepared. It should be noted, however, many financial institutions will not
honor a power of attorney for finances unless it's on their form. Because a
power of attorney can be abused, your choice of agent should be someone you
trust with the utmost confidence. For this and other reasons, financial
institutions usually work with trustees upon a loved one’s incapacity.