This is an article from the Law Offices of Cheryl David (cheryldavid.com) in Greensboro, North Carolina, that we thought others may find helpful.
The notion that estate planning is only for the wealthy couldn’t be further from the truth. Estate planning always has been linked to tax planning, which everyone needs to be conscious of. If you fail to take care of basic estate planning documents, you’ll find additional costs and attorney fees through the administration of a probate estate or guardianship, for example, and these costs can exceed $5,000.
It costs money to resolve who should administer your estate simply because you died without a will. The court will require that a family member post a bond to show good credit, and if no one can, an attorney or other third party then serves as the administrator. This adds extra expense. If any property needs to be sold, a court order is needed and more attorney fees are racked up.
All this and more can be avoided with fewer up-front costs by establishing simple estate planning documents. If not accomplished, the probate and guardianship processes can lead to unpaid bills and default on debts, including one’s mortgage. But with proper estate planning — including a power of attorney — someone can step in quickly, paying bills to prevent default and saving significant money. For low- or modest-income families, the cost of not meeting with an estate planning attorney can be much greater than the cost to meet with one.
One often-neglected aspect of estate planning is the setting up of trusts. Again, many people assume that trusts are only for multimillionaires, but they can be affordable — and very useful — estate planning tools even for families of modest means.
Indeed, trusts can be part of an overall plan. Attorneys have always touted the tax planning benefits of comprehensive estate planning, and fear of the taxman used to be a prime motivator for the argument that everyone needs estate planning. Today, the human relationships aspect of estate planning is highlighted. It’s important to help modest families as well as the wealthy determine who should get the estate — which child is more deserving? The important decisions regarding disposition of assets at death may be challenged or manipulated, as some relatives cheat and steal to get a bigger piece of the pie. Will and trust contests are filed daily.
Other newer considerations that are part of all kinds of families: Medicaid planning for nursing homes, as well as same-sex couples and estate planning. It’s important to understand the rules and penalties for Medicaid gifting, for example; without planning, you may become ineligible for benefits right when you need them most.
And let’s consider the role of women in families — even though women have more earning power than ever before, many wives take a back seat to their husbands when the subject of estate planning comes up. But both spouses should be fully involved.
People tend to think of estate planning as something that only the wealthy or elderly need to do. In truth, regardless of age, your situation in life or your level of wealth, estate planning accomplishes universal goals. Sometimes in an attempt to avoid thinking about the worst, we miss the opportunity to do the best for our loved ones. Estate planning helps you confront your fears and eases even a modest family’s responsibilities should the unexpected happen. Give us a call and we can show you how trusts and other estate planning tools can help you.