Ten Reasons to Create and Maintain an Estate Plan

With the first week of 2017 already in the history books, let us assist you in getting your estate plan created or bring your current plan up-to-date, so you and your family are protected from the unknowns of the coming year. Many people do not think they need an estate plan. The problem is, if you do not take control of your estate planning, the government takes care of it for you by determining what happens to your assets during a period of incapacity and at death. Others believe an estate plan is something that can be bottled up and sold on the internet. This could not be further from the truth. Relying on a one-size-fits-all estate plan or a form you can buy on the internet will more than likely result in an inferior estate plan. Talking to an attorney who can help counsel and guide you through the process and develop an estate plan designed for you can save you money in the long run.

Here are ten reasons you need an estate plan:

1. Protect your loved ones by making important decisions while you are still here and able

2. Designate a guardian for minor children

3. Minimize the cost, frustration, and time of probate

4. Designate agents who will be able to manage your financial and medical care if you become unable

5. Manage assets fairly for children from previous marriages and/or for subsequent spouses

6. Minimize estate taxes

7. Preserve your assets to provide added value through several generations

8. Protect loved ones from creditors

9. Plan charitable giving

10. Important family business or marital planning.

So WAIT…It’s Not a Done Deal

Once you have created your Estate Plan, keeping things up-to-date and relevant, is just as important as creating one in the first place. This check-list can assist with making sure you have covered all the bases in your plan and that everything is current. The presence or absence of one or more of these elements can spell disaster! How many of these apply to you?

• Minor Children – Is anyone to who your wish to leave money under the age of 21? The court may pick a guardian/conservator to make decisions for a minor and manage the money. Court costs can eat up much of the estate. Have you properly planned for minors?

• Step Children – When spouses have children by a previous marriage, the children often end up battling the parent, step-spouse or even the other step-children for control during your life, in the event of disability or after your death. Does your current plan prevent this?

• Disabled Children or Dependent Adults – Disabled children and dependent adults require special planning to ensure that public assistance programs are not lost. The worst thing to do would be to leave an inheritance to such individuals without proper planning. Are you putting someone’s government benefits at risk?

• Marriage the Second Time Around – For anyone contemplating marrying again, will the remarriage affect your children’s inheritance? Inheritance protection for children is needed in estate planning. Have you protected the children’s inheritance? Will his assets go to his kids? Will her assets go to her kids? Definitely something that needs a plan put in place.

• Inheritance Protection – Do you have inheritance protection for your children or other loved ones who should be protected from lawsuits, creditors, divorce and even bankruptcy?

• Failing Health/Incapacity – If you are, at some future time, disabled, who will care for you and manage your money? If you have not spelled out who and when others will take over, you will be doomed to have the court make the decision for you. Proper planning will avoid unnecessary spending and improper use of your money.

• Self-Employed or Rental Property – Do you own rental property or are you in business for yourself? There is a time delay in appointing a personal representative of a will. Does your plan protect your business and assets from lawsuit creditors?

• Join Tenancy Property – Property owned this way could be frozen if a joint owner becomes mentally disabled. Property may also pass to unintended persons at death, with much higher taxes because of joint ownership. While avoiding probate, property passed this way will suffer greater losses to taxes and creditors.

• IRA or 401K – Retirement accounts are almost never coordinated with an individual’s estate plan, resulting in huge income tax losses and estate taxes. Do you have the planning in place that can avoid this and allow these plans to grow tax deferred for your future family members?

• Taxable Estate – The amount you can transfer free of estate taxes changes constantly. Estate tax rates vary from 37% to 55%. They apply to both single and married individuals. With the right planning, you can easily avoid unnecessary estate taxes. Will your plan save you from these taxes?

• Powers of Attorney – These powerful tools may be the subject of abuse and result in a loss of control. Does your Power of Attorney include instructions for family members as to how you would want the money spent?

• Simple Will – Even a simple will may fail if you have not properly title how you own your property. Joint ownership will cause a will to fail. Is your will funded?

• No Planning – If you don’t have a will or trust, the state of Colorado has written your will for you. Will property pass to unintended heirs?

• Obsolete Planning – The average estate plan has not been updated in 19.6 years. Consider all the changes in your own situation (personal and financial) and in the law, both tax and non-tax changes. Will you miss a planning opportunity by not updating?

• Substance Abuse – Is a family member an abuser of drugs or alcohol? Do you have special planning for loved one who abuse drugs or alcohol? Prevent their inheritance from being spent on drugs or alcohol, but instead spent on housing, food, etc.

• Predators – Is there someone in your family who could be manipulated or forces to spend money in a way you would not want? Will your current plan protect the people who have a hard time saying “no”?

• Spenders – The average inheritance is completely spent within 18 months of receipt. Will your plan give family member the money that they need when they need it while preventing it from evaporating too ?

We Can Help!

Evans Case focuses on listening to our client’s goals and objectives, treating them with respect, and offering alternatives which are specifically tailored to meet and surpass those goals and objectives.  We incorporate wills, trusts, powers of attorney, and other techniques as part of estate and transfer tax planning. Contact us today for your FREE 30 minute consultation.

Aaron Evans
Managing Partner at Evans Case, LLP
evans@evanscase.com
303-757-8300