What is an "Estate Plan?"
It’s a plan to decide “who gets what” when you pass away, right? Although this is a part of an estate plan, a comprehensive plan will also address how you and your family will be cared for during your mental incapacity, and any possible creditor protections for your beneficiaries, among other things.
Common Excuses for Not Planning or Updating Your Estate Plan Regularly
“When my dad died, my mom didn’t have to do anything and everything seemed to turn out just fine. So, I think we’ll be okay, too.”
Since many married couples hold their assets jointly, there do not appear to be any issues at the death of the first spouse: no probate, no taxes. However, without proper planning, both probate and estate taxes could occur at the death of the surviving spouse. Also, any issues about the surviving spouse’s mental incapacity would most likely have to be dealt with in court.
“I’ll just let my family decide what to do with me as I get older and can’t care for myself.”
Dealing with your waning mental capacity and the challenges that go with it will probably be the most difficult and stressful experience for your loved ones. Through detailed planning, you can help relieve them of some of this burden while advocating for yourself.
“I’ll be gone, so who cares how much has to be paid to attorneys and the courts?”
Probate can cost up to 5% of the gross value of the assets being probated. For example, this would mean$25,000 in attorney and personal representative fees and court costs for a house that has a fair market value of $500,000 at the date of death . . . even if there is only $10,000 equity in the house because there is a mortgage of $490,000! Proper planning can help to avoid a costly probate, leaving more for your loved ones.
“We just did our trust several years ago, and nothing has changed with how we want to leave our things to our beneficiaries, so we’re okay.”
A trust must be administered based on not only what the trust, itself, says, but by statutory law and case law which are in effect at the time of the administration -- not in light of the laws that were in effect when the trust was originally drafted.
Statutes can be made and changed by the state and federal legislature every year, and case law can be made as a result of a dispute over what beneficiaries or others think should be happening with a loved one's assets after they pass or during their incapacity.
Enrolling in a formal maintenance program assures that your estate plan will be updated regularly for any changes in the law, as well as for changes in your personal and financial circumstances, so that your plan does what you want, when you need it to . . . which could be many years down the road.