WHY YOU NEED AN ESTATE PLAN

by Raphael A. Rosemblat on Oct. 13, 2015

Civil & Human Rights Elder Law Estate  Estate Planning Estate  Wills & Probate 

Summary: Considerations in favor of creating an estate plan

  
WHY YOU NEED AN ESTATE PLAN

  You may be among the significant number of individuals who have no estate plan or have only a simple will. Now is the time to consider changing to a living trust. In many cases, the failure to plan, relative to the expense to create a trust,  will in the end be more costly.

  There are hidden costs in failing to create a trust, since a trust avoids probate, prevents court control of assets at incapacity, will give your loved one  more control over the distribution of your estate after you die, and lets you keep control of your assets while you are living--even if you become incapacitated.

Probate is the process you get many times when you have no trust or only a will.  Probate involves the use of the courts over a period of one to two years to sees that, when you die, your debts are paid and your assets are distributed. Probate costs are typically substantially more than the set up costs for a trust.  Attorney fees and executor fees and other costs must be paid before your assets can be fully distributed to your heirs. Your loved one may even be faced with multiple probates if you own property in other states.

Probate takes time, usually 1 to 2 years. During part of this time, assets are usually frozen so an accurate inventory can be taken. Assets can be distributed or sold with court and/or executor approval. Even a family allowance may require court approval.

The probate process is inherently a public process, so any "interested party" can check for your assets and your debts. This public airing  helps assist disgruntled heirs to contest your will and can expose your family to unscrupulous solicitors. Your loved one lose a substantial degree of control

  A will, unlike a trust, provides  no protection if you become physically or mentally incapacitated. If you or your loved one become disabled, due to Alzheimer's,  stroke, heart attack, you may find the court  taking  control of your assets before you die through a court appointee

This public process can be costly, time consuming overly complicated,  difficult to end if you recover, and does not replace the need for probate at death.
Most individuals believe they have the perfect solution by holding property in joint tenancy. How

ever,  joint tenancy does not avoid probate but merely postpones it, since when one owner dies, full ownership does transfer to the surviving owner without probate.

  Other problems ensue when you hold property in joint tenancy. With a joint owner, you face such unpleasant realities as the joint owner naming other joint owners and increase your chances of being named in a lawsuit and of losing the asset to a creditor. Joint tenancy is also not a wise choice for tax reasons. 

  Another popular misconception is that you need only a power of attorney to handle your affairs. A durable power of attorney lets you name someone to manage your financial affairs if you are unable to do so. A separate power of attorney for heath care decision may also be prepared. It should be noted, however, many financial institutions will not honor a power of attorney for finances unless it's on their form. Because a power of attorney can be abused, your choice of agent should be someone you trust with the utmost confidence. For this and other reasons, financial institutions usually work with trustees upon a loved one’s incapacity.

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