2 Important Reasons You Need an Estate Plan (video)

https://youtu.be/KaenVsOWp9E

The first reason you need an estate plan is to be in control of the distribution of your estate.

Without a plan, the State, not you, decides who controls distribution of your stuff.  You lose all choice when a Judge takes over.

Recently I had a lady come in who had just lost her husband unexpectedly.  He owned valuable land close to the XNA airport only in his name.  But he had never written a plan for how that land was to be distributed.

So, the state decided how it was to be split up.  She gets 1/3^rd of a “life estate” in the property.  A life estate means she owns 1/3^rd of it during her lifetime only.  She can’t sell it without his children’s permission.  Then when it would sell, she would only get a portion of the 1/3^rd because it’s a life estate.  Figuring she is about 65 years old; she gets 65% of 1/3^rd of the estate or about 22% of the total instead of 33%.  And the older she gets, the less she gets if the land is sold.

His children split the other 78% evenly between them.

If you want to control who gets what, when, and how much; control who will manage your affairs if you can’t; protect your assets and finances; protect your family; or control who manages your healthcare if you can’t then you need an estate plan.

The second reason is that without a plan, the State, not you decides who controls and manages your money, property, affairs, and healthcare if you can’t.  You lose all power.

Mark had been diagnosed with rapid onset dementia.  Fortunately, his wife brought him in to get a durable power of attorney almost immediately.  After determining that he still had the mental capacity to sign, we had him execute a durable power of attorney with his wife as his agent.

Due to an unfortunate turn of events, he needed to go into long term care about 8 weeks later.

Without his durable power of attorney, his wife would have needed to go to court to get a guardianship.  That would have taken about $3,200 and trips to court instead of the $600 they spent on the durable powers of attorney.  Not to mention, they don’t have to see a Judge and make part of their private affairs public.

The same goes for healthcare.  Without a healthcare power of attorney, somebody will need to step up and get a guardianship to be able to oversee medical treatment.

If you want a say in who will stand in your place to make decisions, then you need an estate plan.

If you want to control who gets what, when, and how much; control who will manage your affairs if you can’t; protect your assets and finances; protect your family; or control who manages your healthcare if you can’t then you need an estate plan.

Not to mention reducing and eliminating taxes, headaches, anxiety for your family, worry, hassles, and money given to lawyers to settle the estate.

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How is Estate Planning Like Insurance?

Let me ask, why do you buy insurance? I know I buy insurance to protect against the future risk of losing money.  I buy insurance to protect my health and property against the high cost of replacement.

You do estate planning for much the same reason.  Plan to protect against future legal hassles, losses, costs, and risks.

Let’s assume you leave a $200,000 estate.  That isn’t hard to do by the time you add up the value of your home, cars, furniture, and other things.

Probate will cost your family $12,000 or more off the top. Probate costs just about 6% of the total estate.  That’s money to the attorney and others first, not your family. If you create a basic plan to eliminate probate for $2,000 and it costs $1,000 to settle it later, you just gave your family an extra $9,000. 

Probate takes 10 months or more to get done once it is started.  A plan to eliminate probate reduces that time to a few months.

Probate must pay your final expenses and bills.  A plan to eliminate probate doesn’t have to pay those bills saving your family even more money.  No telling how much that will put in your family’s pocket.

Probate can put your financial information in the public court record.  This gives financial predators the opportunity to find out how much your family is getting.  Then those same predators can prey on your family trying to get their money.

A plan protects against future emergencies and medical events.  Planning makes sure that your family doesn’t have to end up in court to get permission to manage your financial, personal, and healthcare decisions.

Without a plan, family often must go to court to get permission from a judge to make your decisions. The basic, uncontested cost, for this is $2,400 plus filing fees and other costs.  Then, every year, an accounting of your property must be published in the public court records.  Your family may find themselves preyed on by financial predators.

With a plan, your family already knows who will be in charge.  Not only did you save your family $2,400 but you also saved them the hassles of going to court, filing paperwork, and more.

I’ve just talked about 2 of the major reasons you want a plan.  There are many more and all of them protect against future risk, just like insurance.

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7 Signs You Need a Trust – Video

In no order of importance, here are 7 signs you need a trust:

1.You have children with addictions to drugs, alcohol, spending, gambling, etc.

2.  You have children or a spouse that is a poor money manager or has credit problems

3.  You have real estate in multiple states

4.  You want the best chance at avoiding probate

5.  You have children with marital issues

6.  You have children with special needs

7.You have children under 18 years old

These aren’t all the reasons to have a trust but are some of the big reasons to have a trust.

And, if you don’t meet any of these criteria, it doesn’t mean you don’t need a plan, but we may be able to do it other ways without a trust.

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Why You Don’t Need an Estate Plan

You don’t need to create your own estate plan and I want to tell you why.

The State Government has already written a plan for you and if it works for you, you don’t need to write your own plan.

Let me lay it out for you, and you can decide if their plan is good for you or not.

First, the State’s plan for your final estate is probate.  Technically, since you don’t have a Will, it is called intestate succession.  Because you didn’t leave a Will or Trust, the state has to make all the decisions.  The state has already decided who will get what, when, and how much.  Your spouse, if you are married, gets 1/3rd and your children will split the other 2/3rds.  If you family can’t agree on who gets what, then a judge will decide for them.  The judge may even have to order most everything sold and just split the money.  Your private affairs and net worth become part of the public record for anybody to look at.  This can lead to financial predators preying on your family.

This whole process should only take about 12 to 16 months.  It will only cost 6 to 10% of your final estate.

Second, if you can’t make decisions anymore because of dementia or any other reason, somebody will have to go ask a judge for permission to make decisions for you.  Their power to make decisions is limited and they will have to ask the Judge permission to do many things.  Also, your private affairs and worth become part of the public record for anybody to look at.

The initial trip to court will set your family back at least $3,000 in legal fees alone not including filing fees and other costs.

Third, your healthcare will be in the hands of the doctors and they get to make all the decisions concerning your healthcare if you can’t make the decisions yourself.  You could be kept alive on machines against your wishes while your family fights among itself and with the doctors concerning your care.

If this doesn’t sound like what you want for you and your family, then I would like to invite you to talk to me about creating your own plan to take the place of the State’s plan.

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