Given the choice, would you rather plan your next vacation getaway or your estate? I thought so.
Let's face it... no one enjoys a conversation about death – especially their own! To paraphrase Woody Allen, most of us don't have a problem with death, but we just don't want to be there when it happens! And, with the estate tax exemption now set at $5 million for an individual and $10 million for a couple, many people may believe they have no reason to consult an attorney about their estate planning. Unfortunately, avoiding the topic of estate planning can mean unnecessary expense, confusion and conflict.
SmartBusiness last week highlighted the fundamentals of a "well-thought-out estate plan," with topics everyone should consider – whether prince or pauper.
- Why do you need an estate plan? A comprehensive estate plan ensures that your estate will be distributed according to your wishes, provides protection for you in the event of your own disability, and allows you to plan for loved ones, to include your spouse, minor children, pets, and charitable causes.
- Can I write my own will? You certainly can, and there are many online sites to help you! However, as in most things of life, you do "get what you pay for." Improperly drafted or last-minute, hand-written wills frequently are contested and invalidated in court. If you don't know what you're doing, the outcome could be much different than you expect.
- What should every estate plan have? SmartBusiness recommends two powers of attorney and a living will. I agree, but would expand the list to include a will, separate powers of attorney for financial affairs and for health care, and a living will/health care treatment directive.
- What about trusts? Many people choose to create trusts, not only to reduce estate taxes (remember, the "portability" provisions in the current law are set to expire on 12/31/2012), but also to help avoid probate. In addition, trustscan help shield assets from loss to due to unforeseen circumstances, such as the potential bankruptcies, divorces or lawsuits of your heirs.
- What mistakes do people tend to make in estate planning? The writer points out two common mistakes: failure to plan for their personal effects, and failure to review and update their plans over time.
You can learn more about comprehensive estate planning in the Fundamental Estate Planning Practice Center on our website. You also may want to review the November issue of our estate planning newsletter, Are You Ready?, which focuses on how to get (and keep) your legal affairs in order.