You may think you can trust family members to carry out your wishes when you’re no longer here, but, sadly, it doesn’t work out that way much of the time. That’s why careful estate planning is so vitally important. The benefits include avoiding handing over assets to unintended beneficiaries, avoiding the time and cost of probate, eliminating family arguments, shielding heirs from undue tax burdens, and protecting minor children. These benefits are simply too numerous and far-reaching for you postpone setting up an estate plan, as many people do.
Still, this is not something you should attempt on your own or with an attorney who isn’t qualified and experienced in this area. You need the services of an attorney who specializes in estate planning to avoid some common – and costly and sometimes disastrous – mistakes.
An estate plan absolutely must be drafted clearly and precisely. The wording cannot be vague or sloppy, or your will or trust may actually say something other than what you meant.
Suppose, for example, your will is drafted such that it stipulates that you are leaving your estate to your “surviving children.” But suppose further that at the time of drafting you had three children, and one of them is now deceased. The remaining two children will then get all your assets. But is that what you really wanted? Maybe you wanted your deceased child’s children (your grandchildren) to receive her share.
A carefully, precisely drafted estate plan will avoid such confusion. So if you want your estate divided equally between your living descendants, per stirpes is the wording your estate planning attorney would probably use. Then if, say, you had a son and daughter and the daughter is now deceased, her half of your assets would redound to her children, divided among them.
If the value of your estate is above a certain threshold amount, your estate, on your death, may be subject to federal and state estate taxes. Most people’s assets don’t reach that threshold valuation, so they don’t worry about estate taxes. But they also aren’t aware that the IRS uses a pretty broad and elastic definition of “estate,” which includes your home and other real estate, your retirement-pension benefits, stocks, cash savings, and proceeds from insurance policies. So estate tax could then become a concern.
For people with sizable assets, an experienced attorney may recommend they make a large gift that does, in fact, require payment of the gift tax during the donor’s lifetime. The aim is to reduce the amount of estate tax that would have to be paid later on the donor’s death. The idea is to make the combined total of the gift tax and estate tax less than what the estate alone would have previously been.
One thing many people fail to take into account when putting together an estate plan is that situations often don’t stay the same. Marriages fail, businesses go bankrupt, loved ones become addicted or incapacitated, and children become estranged. A good plan, then, will include aspects that do take into account such contingencies.
One especially thorny issue in this respect is divorce and remarriage. Without a plan that clearly spells out which beneficiaries get what, disputes often arise between second spouses and adult first-marriage children. Or if you have a second spouse yourself and you predecease him or her, judicious estate planning can protect your children.
Or maybe you have a family member with a history of substance abuse, but who is currently clean, and you’ve made him a beneficiary. But what if he falls back into his addiction? Should you have a provision in your will or trust that sets aside funds for treatment if needed? An experienced estate planning attorney can help you sort through all these matters and prepare for them.
Polls have shown that 57% of Americans don’t have an estate plan. Don’t be one of them. Protect your assets, your beneficiaries, your heirs, and your family with the assistance of Legacy Law Group’s experienced estate planning attorneys.
At Legacy Law Group of Northern Virginia, we are specialists in estate planning, especially with respect to estate tax and gift tax. Our goal is to help you protect and preserve your assets and facilitate a smooth, effective transfer. Just call us at (703) 492-9955 or contact us using our contact form for more information.