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Estate Planning Awareness Week

The Importance to You and Your Loved Ones of Having an Estate Plan

In 2008, Congress recognized the need for the public to understand the importance and benefits of estate planning by passing House Resolution 1499, which designated the third week of October as National Estate Planning Awareness Week.  Still, according to a 2021 survey conducted by Caring.com, only 33 percent of adults in the United States have prepared any estate planning documents. This isdespite the fact that approximately two-thirds of the respondents viewed such documents as somewhat or very important.[1] Many respondents attributed their lack of estate planning to procrastination, but many others indicated a mistaken belief that estate planning is not necessary because they do not have many assets. At Gotto Law office, we believe our clients need to protect what matters most so that their families are well taken care of.

Why should you have an estate plan?

An estate plan can provide significant peace of mind by ensuring that your money and property are protected, plans are in place in the event you become ill, and your accounts and property pass down according to your wishes.

What key elements of an estate plan should you consider?

  • Do you have a last will and testament or a trust? If you do not have these important documents, state law will determine who will inherit your property—and it may not occur in the way you would have chosen. In addition, someone appointed by the court, instead of a trusted person of your choosing, will be in charge of caring for any children or pets and winding up your affairs. Spelling out your wishes in a will or trust will also prevent unnecessary confusion, anxiety, and expense for your loved ones when you are gone. Coping with the loss of a loved one is difficult enough, but the legal hurdles that follow surrounding estates can further contribute to anxiety and stress.
  • Are the proper powers of attorney in place? A financial power of attorney designates an individual to make financial and property decisions (e.g., opening a bank account, signing a deed, getting your mail, etc.) should you become unable to handle your own affairs. A medical power of attorney designates a person you trust to make medical decisions for you when you are otherwise unable to speak for yourself.
  • Ensure that you have an advance directive, also called a living will, which memorializes your wishes concerning your end-of-life care, such as whether you want to receive life support if you are in a vegetative state or have a terminal condition.
  • Do you have insurance? If you become incapacitated (unable to manage your own affairs) or die, it is important for your family or loved ones to have information about your insurance (such as life, health, disability, long-term care, etc.) so they can file any necessary claims. Having the right amount of coverage is also important in case you become ill or die, leaving behind loved ones who rely on your financial support.
  • Compile a list of all of your accounts and other important information that may be needed to manage your accounts and property while you are incapacitated or to settle your affairs after you are gone. Keep this information in a safe place and share the location only with trusted family members or other loved ones. This list should include at least the following information:
    • bank and investment accounts
    • titles to vehicles and homes
    • credit card accounts or loans
    • digital accounts (such as Facebook, LinkedIn, and Twitter) and passwords
    • Social Security card, passport, and birth certificate
  • A list of legal, financial, and medical professionals who have performed services for you is also important. The list should include their contact information so your loved ones can easily reach them in the event you or they need the professional’s help. You should also have HIPAA authorizations in place with medical professionals to ensure that your loved ones can obtain needed information.

How can you encourage your loved ones to create an estate plan?

Estate Planning Awareness Week is a great opportunity, not only to take steps to make sure your own estate plan is in place, but also to talk to your loved ones, especially elderly parents, about creating an estate plan. Estate planning is often a difficult topic to broach because it brings the unpleasant topics of aging and death to the forefront of our minds. Probate and estate litigation can be time consuming and complicated, by trusting a well experienced lawyer, we can help guide you through the process. Not only do we have years of knowledge on these topics, but we genuinely want what’s in your best interest and to help guide you in the easiest way possible.

Here are a few tips to help you start the conversation.

  • Be sensitive to your loved ones’ feelings. Put yourself in their shoes and keep in mind that few people are eager to dwell on the subject of their own death. It isn’t a fun topic, but unfortunately it is inevitable and preparing ahead of time is crucial. One way to begin the conversation is to talk first about the need to plan for an illness and to provide instructions in the event they become too ill to communicate with doctors or handle financial matters for themselves. The conversation can then progress naturally to the importance of having an estate plan that will transfer their money and property in the way that they wish, provide for the care of any dependents or pets, and minimize any taxes, court costs, and legal fees. Communicate that you are not trying to control their decisions but only want to ensure that their own wishes regarding their medical care and property are known—and that all of their instructions are in writing to guarantee that they are carried out.
  • Involve others in the conversation. If you are planning to speak to your parents about the need for an estate plan, try to include any siblings in the discussion to avoid giving the impression that you are attempting to influence or control your parents’ choices. You and your siblings should emphasize to your parents that none of you is asking about what you will inherit, but rather just want to make sure that their wishes are carried out if they become ill or pass away.
  • Consult an estate planning attorney. An experienced estate planning attorney can help you and your loved ones create an estate plan tailored to meet each of your unique needs and carry out your wishes, or they can assist with updating an existing estate plan. We can provide each person with guidance and information about the options available to them. Further, we can help each of you put a plan in place that will prevent unnecessary stress, legal expenses, and taxes, as well as uneven inheritances, disputes among loved ones, and delays in passing life savings on to them. In addition, the guidance we offer will give you and your loved ones the peace of mind that comes with knowing that plans are in place for your care if any of you become ill and that your wishes will be honored when you pass away.

We would love to hear from you and discuss what we can do to assist you in any of these matters. If you’re interested in more information, give us a call or e-mail so we can set up a consultation to discuss your personal interests. We can assist you in the options that exist within estate planning, as well as help execute your wishes through proper legal resources.

[1] Daniel Cobb, 2021 Wills and Estate Planning Study, Caring.com, https://www.caring.com/caregivers/estate-planning/wills-survey/ (last visited August 17, 2021).

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New small estate limits for 2020

Effective January 1, 2020, personal and real property valued under $166,250 may not need to go through the probate process. Previously, personal and real property had to be valued under $150,000 to be exempt from the lengthy probate process. If the decedent’s personal and/or real property is believed to be under $166,250, the petitioner (i.e. a spouse or child) can request a court order which determines the petitioner has succeeded to the personal and/or real property of the decedent. Additionally, starting on January 1, 2020, any heir or beneficiary of the decedent can file to transfer title of the decedent’s real property so long as the real property is valued under $55,425. Previously, this was only an option if the decedent’s real property was valued under $50,000.

These adjustments will be readjusted on April 1, 2022 and then again in 2025. While there are adjustments to the value cap of the personal and real property of the decedent, there are still other restrictions that must be met to avoid the probate process.

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Why does probate cost so much?

Earlier this week I wrote about how probate costs run into the tens of thousands even for homeowners that only have a condo.   The family I met last week was understandably angry at the idea of probate.  Why do you have to pay the government tens of thousands of dollars when you die just to give your house to your children?  The answer is you don’t, but only with proper planning, and a will is usually not enough.

Why do I need to go through probate if I already have a will?

Because your will is just the start of the probate process.

First, the court has to examine your will to ensure that it is a valid will.  Then, once it has determined it is valid, the court must appoint a personal representative to distribute the deceased’s assets.  Someone, usually the executor or an attorney, has to:

  • publish notices and notify creditors
  • deduct costs of administration before distribution
  • transfer assets to beneficiaries
  • handle any pending lawsuits and claims against the estate
  • deal with any contests to the will

These all take time and money.  The estate must cover the cost of Judges, clerks, lawyers, administrators, and all of the time and overhead associated with these people.  These procedures are in place to ensure that the wishes of the deceased are carried out to the fullest.

For the majority of cases where the heirs aren’t arguing about, or even thinking about, who will get what, these costs can seem like an unfair burden.  Still, it is the price we pay to ensure that even the least among us has his or her wishes carried out.

Often, these costs are avoidable through proper estate planning. Rather than pay the tens of thousands later, and go through the lengthy probate process, you can increase the speed of distribution and decrease the costs by making plans well in advance.