ESTATE PLANNING: YOU DECIDE OR THE STATE WILL!
Everyone automatically has an estate! That will be news to many who read this. What do you mean I already have an Estate? You literally have to do nothing to have an estate. An Estate by definition is “all the money and property owned by a particular person, especially at death.” In other words, all of your assets, personal property, real estate, life insurance, automobiles, etc. make up your estate. Nothing is required for you to have an estate.
Your estate will be disbursed one of two ways. According to your wishes and directives or the governments and judges will decide for you and your family. Either you decide or the government will!
Four Generation Estate and Inheritance
That process is known as Probate. Probate is a court action that determines what happens to your assets when you pass away. It’s a very public proceeding where all of your assets and estate information becomes public information. The average probate takes 12-18 months to complete. If you have assets in multiple states then there will be multiple probate actions necessary. Probate is very expensive. You have multiple fees, Attorney costs, and court costs to settle your estate. The costs can vary from 1% to as high as 12%. Essentially if you do nothing then they decide and it is very costly to your family estate.
So all you have to do is set up a Living and Last will, right? Unfortunately not! Wills, provide direction and state your wishes and intentions. However, Wills do not avoid the probate process. The courts still make the final decisions for you. Granted, most probate process judges follow those intention, but many times they are confusing and are subject to interpretation. They still decide for you. This is one of the most misunderstood topics regarding estate planning today. Just to be clear, a Last Will & Testament does not prevent probate. In fact having only a Will guarantees probate. There are some small estate exceptions but for the vast majority probate will be part of the process if all you have in place is a Last Will & Testament.
How then do you ensure your wishes regarding your estate are established according to your desires and avoid probate all together? That is where a Living Trust comes in. A Living Trust is a legally binding document that very specifically spells out your choices, lists all your assets when documented properly and allows for your heirs (spouse, children, etc) to receive estate assets according to your desires. Equally important, is that you avoid probate all together. That means avoiding all the costs associated with probate. Remember earlier, costs can run from 1%-12% in some cases. If you had a $200K estate, after probate it could be reduced by as much as $24K. Leaving only $176K and could take well over a year to settle. It is also important to note the the cost of 1% to 12% is based on the gross estate, not the net worth of the estate. So in the previous example let’s say the $200k estate was the worth of a house and their was still $100k mortgage on that house. The cost would still be as much as $24k dollars, leaving only $76k by the time probate was settled.
This is why Financial Convergence exists. To establish inheritance and create financial independence. We are offering a free 1 hour consultation to anyone who wants to learn more. Click below to schedule.
There are two compelling questions everyone needs to answer:
- Who do you want to make decisions if you were incapacitated or passed away: You or the courts (probate)?
- How much of your estate do you want to be paid to courts and lawyers?
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Disclaimer:
This blog and this website do not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
