Sometimes I am amazed at the number of people who place estate planning on the ?back burner.? But still, in certain ways it is understandable. Many feel that they just don?t have time to go to an attorney. Certainly, there is also the mortality factor: Preparing an estate plan sometimes forces us to think in uncomfortable ways.
Still, there must be at least some argument for doing nothing. So, after thinking hard, here are a few ? with my tongue firmly in my cheek:
1. There is really no need to designate your child?s guardian in a will. Your child really doesn?t care who raises him. It really won?t affect him if a judge makes crazy Aunt Tilly his guardian, should you suddenly die. If she throws your child into a cage until his 18th birthday, it really will work out fine in the end. Don?t worry.
2. Whatever you do: If your home has appreciated over the years do not put it into a trust. Although trusts usually cost perhaps a few thousand dollars to prepare and to fund, you should insist on probate. In California, for example, probating a house worth $500,000 will cost $13,000 in attorney fees alone. This excludes filing fees, appraisal fees, and other probate expenses. California lawmakers even help you to spend this money by fixing the probate attorney fee schedule in the statutes. Also, this is a minimum fee, as court approved extraordinary fees are even more. But don?t worry: It?s only money.
3. There is another reason to demand a probate: Most probate proceedings last a year, or more. Trust settlement is generally faster. That?s simply too darn quick; this is another reason to avoid trusts at all costs. Don?t worry: It?s only time.
4. It gets really good if there is a lot of discord in your family. What a show! If you really work at it, everyone will be fighting to be the administrator of your estate. If your wishes are not clearly stated in a trust there is even more to fight about. Of course, people just love to fight about money. And it?s fun to watch.
5. If you are married and have a nice, fat estate ? Oh boy! The highest marginal estate tax rate is 45%. While there is an estate tax exemption (darn that exemption!), if you structure your estate in the poorest (meaning, the best!) possible way, your surviving spouse may still be able to deliver 45 cents of every dollar to Uncle Sam in short order. Again: Don?t worry. The federal government wants your money more than your charities, children, or other beneficiaries have need for it.
6. Finally, trusts are just too private. Everyone should insist on their family opening a probate so their finances and possessions are known to all as part of a public record. Again, don?t worry!
Of course, this is silliness ? but with a point. Doing nothing places guardianship issues regarding your children before the court with little if any guidance. If you own a house, placing it in a trust will likely provide substantial savings in probate fees. This is especially true if you live in an area of the country where housing prices have gone up substantially. If you have substantial assets, more careful planning may be required to reduce your exposure to estate tax.
In all, estate planning is a pretty good deal.
Related posts:
- Real Estate Verses Stock ? Part 3 ? Other Peoples Money (OPM)
- Estate Tax Rates Increased to Pay For Economic Stimulus ? What?s Coming and What You Can Do About It
- Buy and Sell Real Estate at the Right Time
- Reforestation Trust
- Making Commercial Real Estate a Good Investment
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