Demystifying the Estate Planning 'MONSTER'

There are a number of reasons why everyone (not just the rich) should plan for the distribution of their estates.

Proper estate planning using a qualified estate planning attorney can minimize the many problems most of us would rather not even want to consider since it involves the chain reaction of events upon our death.  Your financial advisor should be able to determine the need and amount of planning that is required to tie up the loose ends of your estate's finances.

 Weigh The Costs

Pay some now or force your heirs to pay more later. 

Costs are mainly related to probate fees (court costs) and death taxes (some, if not all, can be eliminated with some planning).

Other risks can be incurred if there is not enough accessible cash (liquidity) to pay the estate settlement expenses upon death.  This can force your heirs to sell an asset at 'fire sale' prices just to gain access to funds since it may take 9+ months for the estate to 'settle' (the quantifiable assets of the estate are distributed to beneficiaries) if the estate goes through probate.

The Real Monster

Many do not realize that there are ways of avoiding the majority of probate.  And many don't understand why you would want to avoid probate in the first place. 

Probate is the real monster we should try to avoid by utilizing an estate plan.  Probate is a nice word for the process the heirs of the deceased must go through to settle the change in ownership from the deceased 'estate' to the beneficiaries that will be the new owners of the estate's assets.  If the assets of the estate have not been assigned to beneficiaries, it is up to the courts to decide.

During this process, the heirs are going through the typical and emotional mourning process (denial, guilt, anger...) and it is often the time that friction can actually divide even the most emotionally stable families.

Public Record

If the estate is required to go through the probate process, many do not realize that this information becomes part of the public records for anyone to view.  This information is now becoming more accessible with the introduction of the internet.

What does this mean to your heirs?  Their names, addresses, social security number are posted on the world wide web for anyone to access.  This means a dishonest person anywhere in the world has access to your family's personal information.  Identity theft is one of many potential hazards as a result of the probate process. 

So here you are, an honest person that never bothered anyone all your life.  All you have to do is to, well, do nothing except die and soon after your family's personal information becomes public information.  For this reason alone, it is a fantastic idea to do whatever you can to avoid probate at all cost.

Other Benefits Of Going Through The Estate Planning Process

• You get to designate who you want to manage the distribution of your assets.  If you do not, the court will likely appoint their own.

• You can specify who you want to take care of your children and/or other dependent individuals that require special assistance.

• You can 'stretch out' the distribution of assets and investments over a period of time instead of in one lump sum.  This would be beneficial if you were concerned about a beneficiary who may not be mature enough to handle a lump sum distribution.

You're likely thinking to yourself, "Boy, this estate planning sounds like something everyone should do".  If that's the case, let us know so we can discuss your particular situation.

Feel free to contact any one of the professional advisors at First Investment Corporation to discuss your individual situation.

Good luck!

 

Securities Offered Through Dominion Investor Services, Inc. Member FINRA and SIPC.