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Five Estate Blunders
Quick.
When hear the words estate planning, what mental images do you see? Do
you see beautiful, tanned people with incredible
wealth, living in enormous mansions, riding in shiny limousines and
boarding private jets bound for exotic destinations? If so, then you are
only partially correct. In reality, everyone has an estate worth
planning. Some are just more complex than others. In this article we
will review five basic estate blunders common to princes and to paupers
alike, from Wall Street to Main Street.
#1
Incapacity Issues
Every 18-year-old has an estate, even if they have only two dimes to rub
together. On your 18th birthday you are considered an adult American
citizen and you become responsible for your own personal, health care
and financial decisions. Even your parents become strangers to you, in a
legal sense, should you become incapacitated due to an injury or an
illness. This same legal strangerhood applies, by the way, between
spouses.
As a result, every person age 18 and over,
married or single, must appoint agents through proper Durable Powers Of
Attorney to make their personal, health care and financial decisions in
the event of their incapacity. Alternatively, a court process involving
at least three lawyers will be required to appoint agents to make such
decisions for you under the ongoing supervision of the court. And this
can be rather expensive and invasive of your privacy.
#2
Minor Children Matters
Silver
and gold aside, if you are blessed with children, then they are your
most valuable assets...even if you feel like trading them for S & H
Green Stamps at times. If your minor children were orphaned, who would
rear them to adulthood and impart your morals and values to them? Only
through a Last Will & Testament can you appoint the appropriate
guardians (e.g. back-up parents) for your minor children. Alternatively,
a court process would be required to appoint them. This court process is
not only expensive and public, but the court may not appoint the same
parties you would have selected.
#3
Death & Taxes
On
every actuarial chart of every life insurance company death is a 100%
certainty. In fact, there is a long history of anecdotal evidence to
support those charts. When it comes to transferring your earthly
possessions upon your death, you can either make it easy on your loved
ones through proper estate planning or you can leave it up to the court
system by default. Prior planning is, without fail, the more efficient
and effective option. There are a variety of planning methods to
accomplish this transfer. For example, Revocable Living Trusts are
commonly used to transfer assets post-mortem, independent of the legal
system in many states.
Benjamin Franklin observed that the only two
certainties in life are Death & Taxes. The United States Supreme
Court has ruled that no taxpayer should pay more than his or her fair
share in taxes. That said, proper estate planning can save hundreds of
thousands of dollars from unnecessary federal estate taxes. If you are
married, is your estate plan taking full advantage of your available
estate tax exemption through a combination Credit Shelter/QTIP Marital
Trust?
#4
Inheritance Risks
No
one values the worth of a dollar like the person who earned it and paid
taxes on it. Have you arranged your estate to impart your work ethic to
the next generation and beyond? Careful consideration should be given,
therefore, to protecting and preserving an inheritance through one or
more Long-Term Discretionary Trusts for your loved ones. Properly
structured, such trusts will protect and preserve an inheritance for
generations to come from squandering, divorces, lawsuits and
bankruptcies. Without proper estate planning, a lifetime of thrift can
disappear in a season of conspicuous consumption or through personal
misfortune.
#5
Procrastination Perils
Some 70% of adult Americans have no estate plan at all and many others
have an outdated plan that no longer meets their needs. As a result,
these otherwise responsible adult Americans may leave a legacy of
unnecessary pain and conflict for their loved ones.
Conclusion
Every
adult American needs proper estate planning, not just the rich and
famous. Qualified legal counsel can help avoid these five estate
blunders.
This
publication does not constitute legal, accounting or other professional
advice. Although it is intended to be accurate, neither the publisher
nor any other party assumes liability for loss or damage due to reliance
on this material.
Copyright © 2004 by Integrity Marketing
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