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The Word On The Block

I’m Not Rich Enough to Need a Whole Estate Plan!

7/18/2022

 

A common concern we hear in the initial stages of estate planning is that people think they do not have enough assets for an estate plan to be worth it. “I just need a simple will,” they often say. However, the premise of an estate plan is not for tax purposes (unless you are a multi-millionaire) and is not about solely about distributing the money. The primary reason for an estate plan is to develop a strategy – to put a structure in place that gives you the flexibility you want and will handle the contingencies of life.  

A good example of this can be seen in a complicated trust we recently developed. Our clients were looking to leave their vacation cabin to their 15 grandchildren with the expectation that they would all be able to use it. While the cabin was only worth $25,000, it was important to them that all their grandchildren would have access and that there was no animosity within the family. By establishing these wishes through a trust instead of a will, they guaranteed they would be honored once they were gone without causing needless complication or court involvement.
Beyond the transfer of wealth and assets, there are other factors that should prompt you to have an estate plan in place, such as:
  1. Minor Children: Who will be responsible for looking after your children? What happens if that person is no longer around? There are many circumstances where if custody goes through the court systems, your children may not end up with who you intended them to be with. An estate plan eliminates any doubt of who has custody once you are gone.
  2. Power of Attorneys (medical & financial): If you are in the hospital, do you want your loved ones to be able to make decisions on your behalf? The medical and financial power of attorney documents inside of an estate plan ensure the person you put in charge is able to make decisions should you become incapable of doing so. 
  3. Interpersonal Conflicts: You may believe fighting about assets and medical care is above your family, but we have seen it countless times when there is a lack of an estate plan in place. With a properly thought out and explained estate plan, many conflicts between family members can be avoided. Without a consistent plan, you may have inadvertently left landmines. [WB1] 

Some estate plans include a trust, but many do not. Without a trust, your wishes will be honored, whether that is through a beneficiary designation or through your will. With a will, for your assets to be allocated according to your wishes, they will have to go through the probate courts, which usually means:
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  1. Loss of privacy: Everything now happens under the oversight of a judge, meaning you have invited a third party to weigh in and judge your family dynamics. If there is a will in place, it is left up to the judge’s interpretation, which could result in unwanted outcomes. For example: recently we had a home-written will that had to go through probate court. The judge assigned decided the will was ambiguous and therefore needed another hearing and opened a can of worms.
  2. Unwanted Expenses: The cost of probate can be substantial. Even the most basic cases, not involving any conflict, can involve attorney and court fees totaling thousands of dollars, even for a small estate.
  3. Delays: The average uncontested probate case may take longer than a year. You are at the mercy of the court timeline.

With a proper estate plan in place, these inconveniences can often be avoided. Beginning the process of creating an estate plan tends to be the hardest part. Take the first step by consulting a lawyer to get all your questions answered and come up with a strategy specific to your needs. From there, your attorney will walk you through the entire process.

Keep in mind, it is often less expensive to set up an estate plan and go through the work on the front end, rather than not having one in place and going through probate. In many cases, estate plans can be done in less than three weeks.

Start today with a free consultation.

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    William Block

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