By: Terry Parsons | Category: Financial Services | Issue: December 2014
An estate plan offers Lynn Wineinger, pictured with her grandson Elijah, peace of mind that her money will pass on to family according to her wishes.
It is estimated that over 120 million Americans do not have proper estate plans in place. Objectives for estate plans vary from person to person, family to family. Families have different objectives when it comes to their estate plan; however, most couples tend to share five core objectives.
To provide for loved ones. Ensuring a spouse, child, even a charity are provided for in the event of an illness, accident or untimely death is the most important estate planning objective for most couples. In addition to protecting your assets, an estate plan lets you determine how and to whom your assets will be distributed. Pro football quarterback Steve McNair was shot to death in 2009 at age 36. In addition to his wife and children, McNair was supporting his mother. As a result of no estate planning, his mother was evicted from her home and the estate he had intended for his family was hit with a massive tax bill.
To plan for incapacity. Couples are concerned with what will happen to their families in the event of a sudden disability from accident or illness. Who will manage long-term care needs? Young and healthy couples need to plan now, not later. Remember Terri Schiavo, who suffered severe brain damage in 1990 following a heart attack? Lacking a power of attorney for health care, her husband and parents engaged in a prolonged battle over the right to end or extend her life.
To minimize taxes. Minimizing taxes ensures more money is left to loved ones, instead of hefty tax bills. Actor James Gandolfini (“The Sopranos”) died in 2013 at age 51. Due to questionable estate planning, his reported $70 million estate may owe $30 million in estate taxes.
To manage assets. A couple may decide to manage their own assets or they may appoint a professional. Either way, careful consideration should be given as to who will continue the asset management after death. Are you thinking a family member or trusted friend? Do they have the necessary skills and your best interest in mind? What happens if they die? Tobacco heiress Doris Duke died in 1993, leaving a $1.2 billion estate. She named her butler as her executor. He was ultimately removed by court order after squandering massive amounts of her estate. If you choose a professional trust company to manage your assets, is there the ability to remove the organization if necessary (i.e., the surviving spouse moves to another state or the trust organization reorganizes or merges)? Flexibility is a key consideration.
To ensure privacy. Privacy is often overlooked as a priority for estate planning but it’s extremely important. Elderly individuals are often targets of fraudulent solicitations and schemes. If an estate plan can preserve a couple’s privacy, it may help protect the surviving spouse from being targeted. Assets are subject to probate, which are public records and can be viewed by anyone. Look into a Revocable Living Trust, which avoids probate and ensures privacy for the family.
Estate planning is not just for the wealthy. If you own property of any type – homes, cars, bank accounts, investments, collectibles – you need an estate plan. Not sure how to begin? Talk to your accountant or local bank representative about trust considerations.
Opinions expressed above are the personal opinions of RCB Bank Trust Client Development Officer Terry Parsons, and meant for generic illustration purposes only.
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