Estate planning is one of the core responsibilities of adulthood, but many people completely ignore the subject. The truth is, most of us don’t want to think about death and that causes many people to put off estate planning until they are old and gray.
We recommend a more proactive, systematic approach. If you put estate planning off indefinitely, you may never get around to it, and people die intestate every day.
Plus, there are details that should be addressed to plan your estate in the optimal manner.
Let’s look at four compelling reasons why you should work with an attorney from our firm to put an estate plan in place.
Avoid a Ball of Confusion
Imagine the situation your family would be facing if you pass away without any estate planning documents. The emotional part of the equation would be profound, so no one would have the bandwidth for added burdens.
At the same time, life for the survivors would go on, and action would be required.
Do your loved ones know how to initiate the administration of an intestate estate? If your wishes were not clearly stated in writing, would everyone in the family know what you would have wanted? Is it possible that some people could see things differently than others?
If you do pass away intestate, the probate court would supervise during the administration process. A personal representative would be empowered by the court to act as the administrator, and final debts would be paid.
Ultimately, the assets would be distributed under the intestate succession laws of the state of California. Under these circumstances, people that you love could be shortchanged or disinherited, but you can prevent this outcome if you take the right steps in advance.
Limit Estate Tax Exposure
People that have been particularly successful from a financial standpoint have to be concerned about the impact of the federal estate tax. It carries a 40 percent top rate, and it is applicable on the portion of an estate that exceeds $11.7 million in value.
This dollar figure is called the credit or exclusion, and it is scheduled to go down to $5 million (adjusted for inflation) at the beginning of 2026.
If your estate is valuable enough to be taxed, you have to take steps to mitigate your exposure. In addition to the federal estate tax, there are 12 states in the union that have state-level estate taxes. California does not currently have a state estate tax.
Our neighbors in Oregon have an estate tax with a $1 million exclusion, and there is a state-level estate tax in Hawaii with a $5.49 million exclusion. A state estate tax would apply to your estate if you own valuable property in the state, so you should keep this in mind.
One of the disturbing things about the lack of estate planning preparedness is the fact that many people without estate plans are the parents of dependent children. If you are in this category, you should definitely put a plan in place to protect your family.
You can name a guardian in a simple will, and life insurance can serve as an adequate income replacement vehicle. A living trust or a testamentary trust can be established to designate a trustee that would manage the funds on behalf of minor children.
Protective measures may also be appropriate if you are going to be leaving an inheritance to an adult child that has a history of poor money management.
If you use a will as your asset transfer vehicle, you would name an executor in the document. After your passing, the will would be admitted to probate, and a long, public, and expensive legal process would unfold.
You could provide a more streamlined situation that will benefit your loved ones if you utilize a revocable living trust. There would be no loss of control while you are alive, because you would act as the trustee.
When the estate administration process becomes necessary, the successor trustee that you choose would be able to distribute the assets in accordance with your wishes outside of probate.
Attend a Free Estate Planning Webinar
Today is the day for action if you are going through life without an estate plan. We invite you to register for an upcoming free living trust estate planning webinar. For more information, click here.