Far too many people go through life without giving a second thought to the subject of estate planning. They assume that they will have time to address it when they are old and gray, and if they never get around to it, the matter will take care of itself.
In reality, there are some compelling reasons why you should have an estate plan in place, and we will look at some of them in this post.
Prevent a Messy Situation
If you die without any estate planning documents at all, the condition of intestacy will be the result. Under these circumstances, your family members will be in disarray from a practical perspective as they are simultaneously grappling with the emotional fallout.
Ultimately, the probate court would provide supervision during the estate administration process, and a personal representative would be named. In some cases, members of the family may not be happy with the choice that is made by the court.
People can have conflicting interests, and this can create a negative dynamic. At the end of the process, some people in the family may be disinherited or shortchanged. Worst of all, your own true wishes may not be carried out if the court is forced to go by the intestate succession laws.
You have the power to make sure that your family does not go through this type of situation.
Protect the Beneficiaries
Quickly creating a simple will and leaving it that is one option, but the people on the list would receive lump sum inheritances. If you are the parent of dependent children, you should certainly make sure that they are provided for if something happens to you, but they cannot handle money.
Short of this, you may be planning to leave inheritances to adult children and/or grandchildren, and some of them may not be ready to handle significant resources.
Another scenario that is out of the ordinary is inheritance planning for people with disabilities that are enrolled in need-based government benefit programs. A sizable inheritance could cause a loss of eligibility.
There are specific steps that can be taken to address all of these circumstances. Your estate plan should be custom crafted to provide for each and every one of your loved ones in the ideal manner.
Your legacy can be decimated by legal actions if you are a business owner, an investor, or a person that is in a high-risk profession. You should definitely implement a proactive asset protection strategy to preserve your resources if you are in a vulnerable position.
In addition to potential legal actions, nursing home asset protection is another consideration. Most elders will need some type of long-term care eventually, and about 35 percent of seniors will require nursing home care.
Medicare does not pay for the custodial care that these facilities provide, but Medicaid will cover long-term care. You could establish and fund an irrevocable trust with future Medicaid eligibility in mind, but the action must be taken at least five years before you apply for coverage.
Estate Tax Efficiency
Families that have been particularly successful from a financial standpoint have to be concerned about the potential impact of estate taxes. In Vermont, we have a state-level estate tax that is applicable on the portion of your estate that exceeds $5 million.
On the federal level, there is an estate tax with a 40 percent top rate and $11.7 million exclusion. The exclusion is the amount that can be transferred before the estate tax would kick in.
If the value of your estate is in taxable territory, you can implement a tax efficiency strategy that will mitigate damage.
Schedule a Consultation Today!
Our doors are open if you are ready to work with a Burlington, Vermont estate planning attorney to put a custom crafted estate plan in place. You can send us a message to request a consultation appointment, and we can be reached by phone at 802-879-7133.
- Planning for the “Silver Tsunami” - November 1, 2022
- Discharge of Indebtedness Income and Student Loan Forgiveness - October 27, 2022
- More than Just Salad Dressing: The Ongoing Saga of Newman’s Own Foundation - October 25, 2022