A lot of people are not concerned about estate planning because they think it is a simple matter that takes care of itself. In reality, there are some very good reasons why you should take the appropriate steps in advance, and we will provide five of them here.
Avoid a Tangled Web of Confusion
Envision the situation that you would be facing if a close family member were to pass away suddenly with no estate planning documents. You and the others in the fold would be handling the emotional loss, and at the same time, you would have logistic responsibilities.
There are many details that must be handled, and if there is no will or trust, how will the assets be distributed? The answer is that the probate court would step in to provide supervision during the estate administration process.
Along the way, people in the family may disagree with regard to the desired outcome. This can cause hard feelings at a time when family members should be coming together to support one another.
In the end, people the decedent would have never left out can be disinherited or shortchanged when the court orders the distribution of the assets under the intestate succession laws.
Don’t let this happen to your loved ones. You can take control of the situation in advance and make sure that your family members are not left to fend for themselves if you put an estate plan in place.
If you are a business owner or someone in a profession that makes you vulnerable to legal actions, asset protection is important. There are steps you can take to preserve your resources with your legacy in mind, and we can help you devise the appropriate asset protection strategy.
In addition to protection from lawsuits, there is another type of asset protection that many people do not think about until it is too late. More than one third of senior citizens will move into nursing homes eventually, and Medicare does not cover long-term custodial care.
It is not easy to pay for nursing home care out of your pocket late in your life. Medicaid is government program that will pay for a stay in a nursing facility so there is a solution.
Since it is a need-based program, you can only have limited assets in your name to qualify. Some individuals will plan through the creation of an irrevocable Medicaid trust, but you have to fund the trust at least five years before you submit your application for coverage. Some individuals instead wait and just do the best they can preserving assets if they find themselves in a crisis situation; even crisis Medicaid planning can be very difficult if you have not done some planning ahead of time.
Provide for Beneficiaries Appropriately
Some people are not ready to handle lump sum inheritances, and in addition to adults who are not good with money, there is the matter of inheritance planning for minor children. When it comes to the latter, you can include a testamentary trust in a will, and you could name a guardian.
An irrevocable trust can be a good estate planning device if you want to provide spendthrift protections for an adult heir, and a child can also be the beneficiary of this type of trust.
The principal would be protected from the creditors of the beneficiaries, and when it comes to adults, you could provide limited distributions over time to prevent reckless spending.
Another situation that calls for a targeted solution is the matter of inheritance planning for people with disabilities who are relying on need-based government benefits. A supplemental needs trust can be used to provide support without impacting benefit eligibility.
Facilitate Efficient Estate Administration
If you use a simple will to direct postmortem asset transfers, the document would be admitted to probate, and the court would supervise during the administration process. It serves a purpose, but it is time consuming, and probate expenses eat into the value of the estate.
Asset distributions through the terms of a living trust are not subject to probate so the estate administration process is streamlined and simplified.
Consider Estate and Inheritance Tax Exposure
There is a federal estate tax that carries an attention-getting 40 percent maximum rate. The good news is that there is an $11.7 million exclusion. This is the amount that can be transferred before the estate tax would become applicable on the remainder.
Clearly, very few families are exposed to this tax, but action is required to implement a tax savings strategy if the value of your estate is in taxable territory. In addition, there is no guarantee that these high exclusion amounts are here to stay so more modest estates may be taxed in the future.
We have offices in North Carolina and Kentucky, and there are no state-level estate taxes in these states. However, Kentucky has an inheritance tax, which is a tax that can be levied on distributions to each nonexempt beneficiary, and there is no large exclusion.
Close relatives are exempt from this tax, but you should definitely understand all the facts when you are planning your estate.
Schedule a Consultation Today!
As you can see, there are compelling reasons why you should create a plan to preserve your legacy. If you are ready to get started, you can schedule a consultation at our Charlotte, North Carolina or Huntersville, North Carolina estate planning office if you call us at 704-944-3245.
The number in Ashland, Kentucky is 606-324-5516, and the number in Florence, Kentucky is 859-372-6655. You can also use our contact form if you would rather send us a message.
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