Hi, I’m Paul.
Many people think that estate plans are for someone else, but not them. They may rationalize that they are too young or don’t have enough money to reap the tax benefits of a plan. Yet as the following list, which represents 10 reasons to create an estate plan, makes clear, estate planning is for everyone, regardless of age or net worth.
If you have questions about estate planning, I’m here to help. There is no commitment and we provide free initial 15-minute phone calls. We look forward to meeting you!
Loss of Capacity
Capacity, in estate planning, refers to the ability to make your own decisions. On the other hand, the loss of capacity can be a great concern because the person can be influenced by other family members, business partners, or others interested in perpetrating fraud.
What if you become incompetent and unable to manage your own affairs? Without a valid estate plan, the courts will select the person to manage your affairs as they see fit. With a plan, you pick that person through a Power of Attorney or a Living Trust.
There are two types of Power of Attorney – a Financial Power of Attorney allows the person to manage financial affairs while the other Power of Attorney handles their health care decisions. However, in Georgia, the Advance Health Care Directive combines the Living Will with a Power of Attorney for health care into one document.
Although you can do a Power of Attorney by yourself, it’s essential to be very careful about Georgia laws and guidelines, so it may be best to leave it to the professionals.
Minor Children
Who will raise your children if you die? The most important thing to consider in an estate plan is who gets custody of your minor children or a child if both you and your spouse were to die.
Without a plan, a court will make that decision. With a plan, you are able to nominate the guardian of your choice.
A legal guardian is an adult with the legal authority to care for the child should their parents die before the child reaches adulthood. While the guardian of the child has custody of the child, the guardian of the estate manages the child’s assets. The same person or different people can assume both roles.
Picking an alternate guardian in case something happens to your first choice and occasionally reviewing this decision can also be wise.
Dying Without a Will
Who will inherit your assets? Without a plan, your assets pass to your heirs according to your state’s laws of intestacy (dying without a will).
Your family members (and perhaps not the ones you would choose) will receive your assets without the benefit of your direction or of trust protection. With a plan, you decide who gets your assets, and when and how they receive them.
Blended Families
What if your family is the result of multiple marriages? Without a plan, children from different marriages may not be treated as you would wish.
With a plan, you determine what goes to your current spouse and to the children from a prior marriage or marriages.
Children with Special Needs
Without a plan, a child with special needs risks being disqualified from receiving Medicaid or SSI benefits and may have to use his or her inheritance to pay for the child’s care.
With a plan, you can set up a Special Needs Trust that will allow the child to remain eligible for government benefits while using the trust assets to pay for non-covered expenses.
Keeping Assets in the Family
Would you prefer that your assets stay in your own family? Without a plan, your child’s spouse may wind up with your money if your child passes away prematurely. If your child divorces his or her current spouse, half of your assets could go to the spouse.
With a plan, you can set up a trust that ensures that your assets will stay in your family and, for example, pass to your grandchildren.
Financial Security
Will your spouse and children be able to survive financially? Without a plan and the income replacement provided by life insurance, your family may be unable to maintain its current living standard.
With a plan, life insurance can mean that your family will enjoy financial security.
Retirement Accounts
Do you have an IRA or similar retirement account? Without a plan, your designated beneficiary for the retirement account funds may not reflect your current wishes and may result in burdensome tax consequences for your heirs (although the rules regarding the designation of a beneficiary have been eased considerably). With a plan, you can choose the optimal beneficiary.
Business Ownership
Do you own a business? Without a plan, you don’t name a successor, thus risking that your family could lose control of the business. With a plan, you choose who will own and control the business after you are gone.
Avoiding Probate
Without a plan, your estate may be subject to delays and excess fees (depending on the state), and your assets will be a matter of public record. With a plan, you can structure things so that probate can be avoided entirely. A timely and proper estate planning process can help you avoid probate court. For example, a revocable trust created while you are still alive can be one of the most effective ways to avoid the probate process.
In fact, many individuals are choosing to set trusts over wills. A trust can also help with reducing gift and estate tax. Although there are no estate and inheritance taxes in Georgia, there is a possibility that you owe money to the federal government.
As you can see, a complete estate plan can be beneficial and can address many concerns. Life often takes an unexpected turn, and everyone can be caught off guard. Estate planning attorneys can help you make sure everything is done according to your wishes. Contact the Law Office of Paul Black for further advice.
