The 3 Evils of Estate Planning

 

What are the 3 Evils of Estate Planning?

1. Probate

2. Death Taxes

3. Conservatorship

Probate

70% of people have no estate plan — will, trust, anything to let family know what they want.

Is a will dangerous to plan your estate? YES. It will go to probate court and lawyers will charge large fees.

Most people think a will can help you avoid probate. Probate is a legal procedure to change the name on your assets (house, car, etc.) when you pass away to a living person.

Probate courts also do what is called a Forum — an open court proceeding where people can come to the court — when anyone who has an interest in the estate can come down and complain to the court, such as disgruntled beneficiaries. What if one of your beneficiaries contests the will, saying it was made under duress?

Then, after those complaints are cleared up, next come the creditors for any money the deceased still had owing when they died.

So, why is probate evil?

1. Very expensive. It is the lawyers who get paid handsomely to take a will through probate.

2. Fees are also paid to:

a. Executors of the will.

b. Appraisers.

c. The court for filing fees.

3. Probate can have a long time delay. Most states’ probate courts take 9 months to 2 years, but some cases can go on for decades.

4. Also, with probate court, this is all on public record: your will, your creditors’ claims, the amount of your estate, all of the information about your beneficiaries.

Inheritance (Death) Taxes

Although federal law has raised the limit before inheritance taxes kick in to over $5 million, they are still something to keep an eye on. No taxes are due on the death of the first spouse, but taxes are due on the estate on the death of the second spouse.

Conservatorship

The third evil is conservatorship. This happens when you are still alive, but incapacitated. What if you get sick, but linger? The 4th leading cause of death in the U.S. is now Alzheimer’s disease. It is a plague on our aging population.

A family member will go to the court to be appointed conservator or guardian of the estate when you are no longer competent to handle your own affairs. Although done out of love and care, this means that the guardian is a FIDUCIARY — a legally responsible person for the other one they handle affairs for. This means that the guardian must keep complete and separate financial records both for themselves and for the one they are the conservator for. Most state courts will require that the conservator file an annual report called “Inventories and Accounting” which must list every penny received for and spent for the person they are the guardian for.

If a spouse or another relative is not up for this, they will have to hire lawyers and accountants to do this — paid for, of course, from the estate.

You can avoid all of these problems with a living trust.

This is just another way to hold legal title to property. What you do is set up a trust and change the ownership of all of your assets to the trust. That is what we will do for you. We will work with you to develop an estate plan to give your estate to whom you want, when you want, without attorneys or government getting their big hands into it.