When you pass away, everything you own is part of your estate. To help you understand why it is important to have an estate plan, consider these things that can impact your estate – or even diminish it entirely.
Probate court is where your state (or county) evaluates your will and makes sure it is accurate and authentic. They will read the instructions in your will and compare them to any state laws – which your estate planning attorney should have followed. From there, the process of paying creditors, distributing assets, etc. occurs. This is a very slow and expensive process. It can take three to seven percent of your estate’s total assets to cover these costs. If your heirs contest your will, the costs can be almost double that. There are ways to save your estate the hassle and costs associated with probate – such as using a trust.
If you own property jointly, that means your assets will automatically be passed to the other owner or owners. This is a common situation between business partners or married couples.
Most estates don’t owe federal tax. In fact, unless your estate is valued at over $5.25 million, it is unlikely you’ll owe any estate tax either. That being said, if your estate is liable for estate tax, you can avoid it through a trust or by simply passing a portion of your estate to your spouse.
There are a lot of factors that can impact your estate. Be prepared by meeting with an estate planning attorney.