Sunday, January 22, 2012

Estate Planning: A Gift to your Loved Ones


Some people think that "estate planning" is only of concern to the very wealthy.  Mostly ploys, they assume, to skirt tax while passing on huge piles of wealth from one generation to another.

But even if limiting death taxes is not a critical issue for you, the careful use of wills, trusts, powers of attorney and other legal planning tools can ensure that the things that you do own, whatever their value, are protected and will be distributed not haphazardly, but in the way that best cares for your family.  

Money left to children or grandchildren, for instance, can be passed on with strings attached, so that it is protected against being frittered away.  Investments, property and possessions earned by you and your spouse can be earmarked to eventually pass to your children so that they stay in the family rather than going to husband or wife number two. You can make sure your children are treated fairly and rectify lifetime inequalities. Family conflicts and jealousies can be avoided.

In the over 30 years I’ve been helping families plan, I have seen how poor planning can devastate the people who dad or mom only wanted to help. I’ve seen inheritances that have been lost to bad sons-in-law, been given away to “cults,” and been confiscated by children’s creditors.  I've seen family relationships destroyed more times than you can imagine. 

And the most effective estate planning is about much more than just planning for your heirs. It also involves lifetime planning through use of legal tools like powers of attorney, trusts, family agreements, and health care directives.  These tools help you retain control over your affairs and financial security during your lifetime. If you ever become incapacitated, they help ensure that the decisions that are made for you will be the ones you would have made yourself, and the person making the decisions will be the person you chose.  Lifetime planning can greatly ease the burdens placed on your family in the event of your incapacity by giving the right people the power to do what needs to be done consistent with your wishes.

Okay, I'll admit that thinking about what will happen in the event of your death or incapacity isn't much fun. It may force you to address family issues and conflicts that you have been avoiding for years. It may force you to come up with a plan instead of waiting for answers that may never come - like will a child finally “grow up” or will a marriage “work out.”

But we all need to recognize that life is uncertain and putting off planning is dangerous.  Just this past week a friend of mine collapsed on a basketball court of a massive heart attack. Young, vigorous, in great shape, he hadn’t gotten around to planning.  Although he survived, he is not competent.  And since he created no powers of attorney or health directives, his family is already lost and struggling with handling his affairs.   

The time to get started is now, while you are healthy and competent.  This is the best time to create a thoughtful and loving, estate plan.  As changes occur in your life and that of your family, you can update your plan accordingly. But you need to get a basic plan in place now. Or, if you created a plan years ago which is no longer appropriate, you need to get it updated.

The price for your procrastination may have be be paid by your loved ones and survivors.  The price may be paid in frustration, in money, in delay, and in hurt feelings.  If you don't put your affairs in order you leave your family's financial security to the ungentle mercy of inflexible laws and slow moving courts. 

And yes, if you have acquired anything of value, failure to plan may result in an unnecessary bequest to the Government.  Pennsylvania inheritance taxes range up to the 15% level, and taxation begins at dollar one.  An estate that is only worth $100,000 can incur an inheritance tax of $15,000. For people of greater wealth, there are also federal estate taxes to consider, with rates that are scheduled to go up to a maximum of 55% in 2013.

A carefully drawn estate plan will guard your family's finances, provide for the special needs of your heirs, and ease the administrative burden on your survivors.  And you know what? You will likely feel much better when you have taken care of this unpleasant though necessary task.  When my clients complete their estate planning, they often tell me that they feel like an enormous burden has been lifted off their shoulders.

Make a loving gift to your family. Set up an appointment with an estate planning attorney now.  If you live in Northcentral and Northeastern Pennsylvania, you can call Marshall, Parker and Associates at 800-401-4552 to get started

1 comment:

welcome to share said...
This comment has been removed by a blog administrator.