Top 5 Reasons You Need and Estate Plan
There are a variety of reasons why it is good to have an estate plan. Here is a quick rundown of the top five reasons why I think it is best to have a thoughtful plan in place:
Avoid Probate. Probate is a court supervised procedure involving lots of documents and forms that must be filed with the court. Needless to say this process is time consuming and cumbersome. Also, California is one of only a handful of states in which the fees for probating an estate are statutory. The California Probate Code states that fees are based on the value of the gross estate without reference to encumbrances or other obligations on estate property. To illustrate, if you own a home worth $700,000 and still owe 400,000, the statutory fees are not based on your equity amount of $300,000, but rather the appraisal value ($700,000) without regard to your outstanding mortgage. Bottom line: it is good to avoid probate.
Tax Planning. Most people don’t need to worry about estate taxes given the current federal estate tax exemption amount ($5.45 million per person) however it is still a good idea to include some tax planning should those laws change.
Protect Your Beneficiaries. You can name a guardian for your children in your Will and financially provide for them in your Trust. You can also protect adult beneficiaries from wasting their inheritance through bad money management or divorce with specific provisions in your Trust.
Make Your Own Arrangements in Advance. You can provide clarity for your family by leaving specific instructions about your health care and name an agent to help carry out those instructions. Also name someone to manage your affairs should you become incapacitated.
Provide Some Peace of Mind for Yourself and Your Family. Avoid leaving a mess to your loved ones. Provide a list of detailed assets and name each beneficiary. Some families are torn apart by the little things such as who will ultimately get a specific piece of jewelry. Take the guesswork and fighting out of the equation.
Now let’s get planning so you can play later! Email or call me today at (949) 387-8707!