3 Things I Learned from My Estate Planning Lawyer Everyone Should Do￼
A wise estate planning lawyer once said that while rich people need estate planning, those who are not rich need it more. This is because they may be unable to afford probate fees in the event of an untimely death.
If you don’t have a Revocable Living Trust or a will, beneficiaries will have to part with 3-8% of your assets in probate fees. Furthermore, the process of asset allocation may take a year or even longer.
The following constitute probate fees:
- Appraisal and business evaluation fees
- Bond fees
- Accounting fees
- Attorney’s fees
- Court fees
- Personal representative fees
- Miscellaneous fees
To settle a Revocable Living Trust, on the other hand, will only cost 1-3% of the assets. Other than that, the Revocable Living Trust has the benefit of privacy. People should not know what you had or even what you are giving.
Three Estate Planning Realizations
As a responsible parent, you should set up a revocable living trust, have an advanced health care directive and draft a clear will. The benefits include succession planning, cost savings, clarity and privacy.
- Forecast Your Death
The greatest asset is time. Everyone wants to live long. Parents would love to see their children grow up and build happy lives. To do this, you have to decide to live healthily. While people are now living longer, life is not long enough—and you will soon realize that. Don’t waste time doing something you don’t want to do.
- Forecast Wealth and Estate Tax Laws
When it comes to creating wealth, again, time is your biggest asset because of the compounding power. Through reasonable returns and diligent savings over a long period of time, you will be able to accumulate a lot. Estimate the amount of wealth you’ll have at the end of your life and then the death tax rate and lifetime gift tax exemption.
The estate tax exemption is at the highest now. Assume that the estate tax rate will continue to decrease and that the estate tax exemption will go up. That would be the logical thing to do.
- Spend and Give More While Alive
Looking at the above scenario in point 2, your inheritors may have to sell a portion of your assets to cater for the tax liabilities. This is unless they are already rich. If you have a business and you’d like it to remain in operation after your death, you may face a few problems.
Instead of paying a huge tax bill on something you have already been taxed for, isn’t it better to donate the amount to charity before you die? Or spend the money on your loved ones and yourself.
If you estimate an unreasonable death tax on your assets, it would be better to enjoy the wealth while you still can.
Those who devote their life to investing and saving overestimate the amount they will need. Most people who are keen on finances die with a little too much wealth. That is why the above three points are important.