Top 4 Reasons for Planning Your Estate
Many people don’t have estate plans, because they don’t understand why it’s important. There are many good reasons to plan for your estate. We will examine four of them.
Avoid intestacy
If your family is left in a difficult situation if you die without any estate planning documents, it’s important to avoid this. The emotional aspect of the equation cannot be described. This makes it is tough to handle procedural challenges during such a difficult time.
Ultimately, the probate court would oversee the estate administration process. They would name a personal representative to act as the administrator, and the process would slowly unfold.
After final debts are paid and all the other details are sorted out, the court would order the distribution of the assets under the intestate succession laws of the state of Oklahoma.
Under these circumstances, your true wishes may not be carried out. You may end up shortchanging or disinheriting people you never intended to. On the other side of the coin, a relative you are not especially close to that does need the money may receive an inheritance.
When you make advance preparations, you can be sure that everyone that you care about will be provided for in the appropriate manner. You will also short-circuit possible disagreements among family members that can arise when there are competing interests.
Protect Vulnerable Beneficiaries
A very small percentage of adults that are between the ages of 20 and 40 have estate plans in place. This could be due to the fact that people are living longer. In addition, parents with dependent children are typically in this age range. You can set up a trust or a custodial fund to protect minor children. If you do not have a significant store of resources, you can use life insurance as an income replacement vehicle.
Adults can also be vulnerable in a different way. A person who has a poor track record with money may spend a direct inheritance too quickly. A living trust that includes a provision for spendthrifts would protect the principal against the beneficiary’s creditors. You can also dictate limited incremental distributions to prevent reckless spending.
Mitigate Estate Tax Exposure
The federal estate tax packs a powerful punch with a 40 percent maximum rate. The bad news is that the federal estate tax has a maximum rate of 40 percent. This is the amount that can be transferred before tax is applied to the remainder. This is the amount that can be transferred before the tax would become applicable on the remainder.
There are strategies that can be implemented to ease the burden. There are also 12 states that have state-level taxes. Oklahoma is not one of them, but if you own valuable property in one of these states, the tax in that state could be a factor.
Protect Assets
Legacy preservation is another piece of the puzzle. Some say we live in a litigious culture. If you have any concerns, you can implement an asset-protection strategy when planning your estate. Plus, there is another type of asset protection that some people do not consider.
Medicare does not pay for long-term care, and most seniors will need some type of living assistance. Medicaid will cover the costs if you can gain eligibility, but you have to divest yourself of assets, because it is only available to people with limited financial resources.
This can be done through the creation of an irrevocable, income only Medicaid trust. The key here is you much fund the trust at least five years before you apply for Medicaid.
Schedule a Consultation Today!
Today is the day for action if you have been going through life without an estate plan. You can schedule a consultation at our Oklahoma City estate planning office if you call us at 405-843-6100.
Our Tulsa office can be reached at 918-615-2700, and you can fill out our contact form if you would rather send us a message.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors Read More! Larry Parman, Attorney At Law, has posted the latest posts on his blog.
