Currently, there is no federal estate tax. However, there are many reasons why you still need an estate plan. This post summarizes some of those reasons to still do an estate plan. 1. Incapacity If you become incapacitated, Powers of Attorney for Health Care and Property can help you avoid a court guardianship case. Court guardianship cases are both time consuming and costly. Additionally, Powers of Attorney for Property and Health Care let you pick the person that you trust to carry out your wishes. This might not be the same person a judge would pick.
For unmarried couples, Powers of Attorney for Property can provide that your domestic partner can continue to use automobiles and other property that is owned solely in your name.
2. Intestacy If you don’t have a Will, the State will provide one for you. But you might not like what State provides. Having a Will lets you decide who you want to leave your money and other property.
3. Guardians for Minor Children For parents of young children, one of the most important reasons to have a Will is to name guardians for your children. If you don’t pick a guardian, a judge will pick one for you. Minor guardianship cases are time consuming and costly.
4. Children Managing Money Do you have children or grandchildren that are mature enough to manage large sums of money (that are meant to pay for their support and college education)? If not, then an estate plan can leave the money in trust so that an adult whose judgment you trust can manage the money. A trust will ensure that the money is spent the way you intend.
Another reason not to leave money to minor children is that a court can decide that if the child inherits more than $10,000.00 (including life insurance and retirement plan benefits) that a guardian should be appointed to manage the money. The guardian will be permitted to hire a lawyer to represent them in the court hearings. These court hearings will occur at least once a year until the child reaches 18. All of the guardian’s fees and the lawyer’s fees will be deducted from the money left to the child. By the time, the child reaches 18 the guardian’s fees and the guardian’s attorney’s fees may have used up some if not all the money for the child’s college tuition.
5. Creditor Protection Creating a trust can protect the money from your children or grandchildren’s creditors. It also can be drafted to prevent their ex-spouses getting the money in the event of a divorce.
These are some of the reasons why it is important to have an estate plan without waiting for the situation on estate tax to be resolved. Even if you believe that estate tax might be applicable to you when Congress addresses the estate tax situation, relatively simple modifications can be made to an existing estate plan.
Disclaimer
This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern.
An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.
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