What to know before you plan your estate?
What is Estate Planning?
In 2015 $2.6 Billion dollars was lost to Probate Court Fees nationwide. Those entrapped in the system were not the wealthiest Americans; someone in their family failed to plan and left them having to untangle the mess just to switch title or get control so they can sell or use the property.
In short, estate planning is the transfer of your estate and wealth in the most cost-effective and efficient way. The Living Trust becomes an integral tool in doing this since no other planning device offers the same level of flexibility, control and management both while your alive and when you depart.
Good Estate Planning must be 1). Cost effective & 2). Efficient.
Nationally 55% of Americans are not planning the inevitable and allowing their families to struggle in the Probate Court system as they lose money and time.
The 2 Biggest questions Americans are asking are:
1. Do I need a will or do I need a Trust?
- Do I have enough to plan?
The Probate or court system is where our loved ones end up going to settle our estates if we haven’t planned. Whether we have a Will or don’t have a Will our estate must be probated in the court. If our gross estate (before deductions) is more than $150,000 of assets or more than $50,000 in real estate in some states and other states it is much lower like $20,000 and above then the estate must go through Probate. Probate comes from the Latin word “probare” or ” probatus” to try, probe, test or to prove something and in this instance someone is trying to prove the validity of your Will or jockeying to get in position as the administrator of your estate so they can distribute your property. The average cost on this is $26,000 and up on a small gross estate of $500,000 and if you own more by virtue of your home the cost can easily swell over $50,0000. When You die intestate without a Will anyone who claims to be a creditor can file in Probate Court to become the administrator over your estate (even over family) and the court could appoint them up if they validate their debt until their debt is fully satisfied which puts a stranglehold on the assets that are supposed to be distributed to loved ones or a charity.
There really are 2 Probates.
The first encounter with Probate occurs while your alive and we refer to it as the “Living Probate.” This is when life throws you a curve ball like a stroke (800,000 people suffer one annually and 35% are 45 and under), heart attack, dementia or Alzheimer’s. You now have to enter the court for a procedure called conservatorship so people can sign off for you in legal capacity. The court procedure has an average cost of $20,000 with many exceeding that due to the need for the court to visually see the person (they will wheel you out to court in this condition), make sure the person seeking appointment is trustworthy (many are not and leads to elder abuse). There is a simple document that is a part of a simple estate plan that avoids this scenario completely and is easy to put in place while you select the person to act as your Agent today while your healthy and clear.
The second encounter with Probate is when you pass away either with a Will or without a Will; does not matter both end up in Probate court. This can be expensive, time consuming and open to the public with marketers using the Freedom of Information Act (FOIA) to access court documents so they can market services. The court will not allow full distribution of the estate for at least a year in many states so that creditors can have an opportunity to file in court. You have to sound the dinner bell in a publication which reads: “come and get it.” Then a credit could file in the Probate Court to become the Administrator of the estate (if no Will) or possible petition to become the Executor (where there is a Will) so that they can use leverage to satisfy their debt. Imagine this third party coming in to court and petitioning the court to become the controller over the estate of your deceased loved one; happens every day.
You can eliminate both of these hassles for your loved ones by having a Living Trust and a Durable Power of Attorney to cover any situation that might take place. It is also highly recommended that you put together an Advanced Health Care Directive (referred to as a Living Will in some states) which describes what you want if faced with a vegetative state or comma and doctors have not given much hope of recovery back to a meaningful way of life. If we don’t let others know what we want they will fumble to figure it out while we are incapacitated and we may linger unnecessarily as family members fight in court and medical bills climb draining the life out of your estate that belongs to our family; after all our lifetime work in accumulating it.
Don’t let this happen to you or your loved ones as there are two plans you can choose:
- The governments Plan (Probate generates 2.6 Billion per year), or
- Your plan which gets more of your wealth to your loved ones or charity of your choice.
The Law Office of James Burns is a veteran owned business dedicated and committed to your success at prices that allow you to move forward and get this essential planning done without a second thought.
We only assist with Plan B as we believe cutting cost, keeping things streamlined, avoiding intrusion into your family’s privacy and avoiding delays is the better way to go.
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