Many years ago, I had fortunate pleasure of interacting directly with Henry W. Abts III, author of the bestselling book, The Living Trust and Founder of The Estate Plan (now The Estate Planning Source). He was passionate about making sure that everyone in this country understood the evils of probate and the many benefits of creating a Living Trust for your family. My long and extended immersion into the estate planning world yielded me several designations including CEP (Certified Estate Planner) through the National Institute of Certified Estate Planners. To say that my eyes were totally opened to the power and benefits of both revocable and irrevocable trusts, life insurance as a wealth creation vehicle, annuities, plus a long list of other amazing estate planning tools, is an understatement. It totally expanded my ability to converse with our clients about a whole new range of wealth accumulation and wealth preservation tools that we plopped right into the Sage toolbox enhancing our ability to further reduce taxes, protect hard-earned assets and take the steps necessary to avoid probate and costly estate taxes.
And because we don’t sell insurance, investments or trusts, it opened the door to meeting a fabulous array of financial advisors, estate planning attorneys and wealth preservation specialists from around the country, many of which I am happy to refer you to today.
But first, let’s start with the question, “What Is Your Estate? It’s simply everything you own – your home and other real estate; bank accounts; stocks, bonds and other investments; IRA and other retirement plans or benefits; jewelry, family heirlooms, collectibles, vehicles, personal belongings; and the benefits from your insurance policies. When you start adding it up—especially when you add in the insurance benefits—you may find, like most people do, that you actually have a lot more than you think.
Why Do Estate Planning? The main reason is to be able to control who receives your assets when you die. And most people want that to happen with the least amount going to legal fees and taxes. But estate planning is not just about what happens after you die. A good estate plan will also protect you at incapacity. It will let you—not the courts—keep control of your assets and decisions about your medical care when you can no longer handle your own affairs.
Misconception #1: A Will avoids probate. No. A Will is the primary tool of the probate system. Your Will is like a letter to the Court telling the Court how you want your property distributed (it’s the only legal way to change the title on assets when the person listed as the owner isn’t alive to sign his name). After your death your representative must prove to the Court that all your property is collected and appraised, and all your bills and taxes are paid, before your property can be distributed to your heirs. It’s costly (attorneys, court fees, personal representatives), time-consuming, emotionally charged, agonizing and the proceedings are public information.
With a revocable living trust you can completely avoid probate—when you die, if you become incapacitated/incompetent and when minor children are involved. That’s because a living trust is a legal document that allows you to transfer ownership of your titled property (home, real estate, car, bank accounts, etc.) and your personal property (jewelry, artwork, grandma’s rocking chair) from your name into a trust, which you control. Assets can flow in and out of the trust. You can change, amend or revoke the trust, if necessary. Since the trust actually owns your assets, no probate will be required, saving your family many thousands of dollars.
Misconception #2: You can do this yourself. I could share thousands of stories of the results of ineffective or non-existent estate plans. The problem is you’ll never know– because it’s your family members who have to clean up the mess.
Misconception #3: Living Trusts costs too much. Compared to a probate proceeding, the cost is miniscule. The fee is determined by several factors: the complexity of the trust; the number and type of assets that are going to be retitled (funding) the trust; additional ancillary documents that need to be prepared like Durable Power of Attorneys, and of course, all those other unique estate and tax planning needs specific to each client that are critical for protecting children/adults with special needs and/or beneficiaries from first or second marriages.
When you take the time to put together a good estate plan with a qualified professional (wealth advisor and/or experienced estate planning attorney), you’ll have the best benefit of all – PEACE OF MIND! You’ll be able to relax because you know your good intentions will have a happy ending.