Studies indicate that the majority of American adults are not prepared from an estate planning standpoint. This is a somewhat strange phenomenon, because these individuals are failing to plan ahead for something that is definitely going to take place.
Some people do not take action because they don’t understand why estate planning is important. In reality, estate planning is important for numerous different reasons.
Avoiding Intestacy
If you pass away without any estate planning documents, the condition of intestacy will be the result. The state of California would ultimately be forced to use the intestate succession laws to transfer your assets.
Under these circumstances, your own true wishes may not be carried out. Plus, the process can be time-consuming. Thirdly, disagreements among family members could arise.
There is no reason to let the chips fall as they may. You can make sure that everyone that you love is provided for in the appropriate manner if you take the right steps.
Special Circumstances
When you plan your estate, you can address special circumstances. For example, if you have a person in the family who is a spendthrift, you could make this individual the beneficiary of a spendthrift trust.
Assets in the trust would be protected from creditors and claimants, and the trustee would manage the resources. You could leave behind instructions for the trustee to follow in the trust agreement, and the beneficiary could receive measured distributions.
Special needs planning is another example. You may have a family member with special needs. Many people with special needs are enrolled in government benefit programs that are only available to people with limited financial resources.
A direct inheritance could result in a loss of benefit eligibility. Special needs trusts are used to address this type of situation.
With this type of trust, the trustee could use the assets to improve the beneficiary’s quality of life without jeopardizing benefit eligibility.
These are just a couple of examples, but a well-constructed estate plan can address various different scenarios.
Estate Tax
High net worth individuals may face federal estate tax exposure. In 2015, the estate tax exclusion is $5.43 million.
If the value of your estate exceeds the amount of this exclusion, you must take steps to gain estate tax efficiency. The estate tax carries a 40 percent maximum rate, so a failure to act could cost your family a great deal of money.
Take Action
Estate planning is important for all responsible adults. If you are presently going through life without an estate plan, you are doing your family a disservice.
We would be glad to help you put the procrastination behind you. Our firm offers free consultations, and you can send us a message through this page to set up an appointment: Campbell CA Estate Planning Attorney.
Litherland, Kennedy & Associates, APC, Attorneys at Law
Latest posts by Litherland, Kennedy & Associates, APC, Attorneys at Law (see all)
- American Academy Awards Fellow Designation to Justin M. Kennedy – Kennedy Recognized for Outstanding Achievement in Experience and Service - August 16, 2019
- Clarity is Key to Planning - August 14, 2019
- How Much is Too Much? - August 7, 2019
