10 Estate Planning Problems That Could Cost Your Family A Fortune

10 PROBLEMS THAT

COULD WILL COST

YOUR FAMILY A FORTUNE

You’ve spent years working and saving what you could of your hard-earned money.  You’ve sacrificed for so long, so that you can leave your family and beneficiaries an inheritance to keep them safe and secure when you’ve passed.  So what problems can arise for your family when you’re gone?  Here are 10 problems that will cost your family a large portion of your money that you’ve saved for your estate… and some estate planning solutions that you can implement right now… before it’s too late!

Problem No. 1:

Probate Administration!

Probate Administration is the Court process of handling your estate assets when you die; including the transfer of title and ownership of your estate to your heirs and beneficiaries. Probate begins with assembling an inventory of your estate assets, then giving notice to creditors, paying bills and taxes, and eventually, passing title to your estate assets, but only after this has been approved by a Probate Court order!

Probate can cost your loved ones a sizable portion of your estate. Aside from the above, there are fees charged by attorneys and personal representatives for their services for the estate.  There are Probate filing fees.  There are fees charged for publishing the notices required.  Other fees include the cost for copies of death certificates, filing and recording fees, bond premiums, estate appraisal fees, and accounting fees. Can you see why Probate is time-consuming and is so expensive?

How Can I Get Around Having To File For Probate? 

Solution:  You can avoid Probate altogether by having an estate planning lawyer set up a Revocable Living Trust for you and your family.  Once your Trust is drafted and funded, your Trust will own your assets.  But while you’re alive, you will control all of your assets inside of your Revocable Living Trust.  But when you die, your instructions that you wrote in your Trust will then control the administration of your assets using the person you have named as your Trustee.  Probate is eliminated along with the time and costs, saving your family many thousands of dollars!

Problem No. 2:

Lawsuits and Creditors

Protect the property you leave to your spouse and children from the claims of creditors, ex-spouses, and even the IRS.

Solution:  Draft a Revocable Living Trust for you and your family.  With the proper creditor protection provisions, your assets that were transferred into your Revocable Living Trust will be protected.

Problem No. 3:

Estate Taxes

For married couples, protect your assets from state and federal estate taxes by setting up and funding a tax-saving Credit Shelter Trust. Under current law, a Creditor Shelter Trust will completely protect your assets from estate taxes for estates valued up to $11.58 million exemption amount for a single person, and $23.16 million for a married couple. Without this type of Trust, beneficiaries who inherit an estate valued over these exemption amounts would pay State estate taxes. Most couples don’t realize that the value of their estate for purposes of determining estate taxes includes their life insurance death benefit proceeds. If their estate  is worth over the exemption amounts, including life insurance proceeds, their heirs will pay estate taxes without proper estate planning. Now the good news: In this example, a well designed estate plan costing between $3,500.00 and $7,500.00 will save an estate up to the exemption amounts all of the State estate taxes.

Solution:  Some other ways you can avoid or reduce estate taxes is by setting up (1) an Irrevocable trust for your children, grandchildren or other heirs, (2) an Irrevocable Life Insurance Trust, (which detaches your life insurance benefits from your estate), (3) a Charitable Remainder Trust, and (4) Second-to-die Life Insurance so you can pay estate taxes for pennies on the dollar. 

Problem No. 4:

Income Taxes

A family can lower its overall income taxes by setting up a Family Limited Partnership to own income-producing property. A parent can do this by setting up a Family Limited Partnership and making gifts of limited partnership interests to the other limited partners, normally their children or grandchildren who pay income tax at lower tax rates.

Solution:  A Family Limited Partnership is an excellent tool to shift income to partners (family members) who pay taxes at lower rates. It is also an effective way to make gifts and still keep total control of the property owned by the partnership. 

Problem No. 5:

Lawsuits

Your family and beneficiaries can get sued for car accidents, creditor claims, negligence, and malpractice if they become professionals.

Solution:  Protect your hard-earned assets from lawsuits by taking the following actions now, as appropriate: (1) purchase an umbrella liability insurance policy, (2) set up a Family Limited Partnership, (3) start lifetime gifting as soon as possible, and possibly (4) set up a Limited Liability Company to shelter estate assets. Further, you can protect your children from lawsuits by putting their inheritances into a Discretionary Trust. This is especially important if your children are likely to become liability magnets, like doctors, dentists, lawyers, and other higher wage earning professionals, or are just quick to spend all of their monies and be left with bill collectors!

Problem No. 6:

Inexperienced Beneficiaries

Protect your assets from being wasted by young, immature, or inexperienced family members. Most beneficiaries spend their entire inheritances in less than two years, regardless of the size of the estate or the heir’s socio-economic background.

Solution:  Set up your Family Trust with protective provisions that include your guidance and instructions on how to safeguard their inheritance using appropriate professionals. 

Problem No. 7:

Guardianship

Guardianship is the process of having a person appointed over you and your estate.  if you haven’t  designated a guardian, the Court will appoint a guardian for you.  The guardianship process is expensive with lawyer fees and court costs.  Also, this person likely to be appointed will be a lawyer who has no knowledge of you or your family.

Solution:  Protect your assets from the high costs of incapacity by (1) setting up a Living Trust so you avoid the need for a guardianship, (2) drafting an Advance Healthcare Directive, (3) drafting a Health Care Power of Attorney, and (4) drafting a Pre-Need Guardian Designation. 

Problem No. 8:

Unwanted Future Medical Care

If you become disabled and incapacitated, your medical providers and hospitals may decide your medical treatment for you without approval from your family.

Solution:  Protect your assets from unwanted and costly medical care by having an Advance Directive for Healthcare, and Health Care Power of Attorney.  An Advance Directive for Healthcare, and Health Care Power of Attorney will contain your instructions, including which medical care, treatment and procedures you want  – and which you don’t want. And having a Designation of Health Care Surrogate ensures that the person who will make health care decisions for you when you become incapacitated is the person you have chosen.

Problem No. 9:

Unwanted Emergency Care

Protect your assets from having to be used up on unwanted emergency care; like being on a respirator and having a feeding tube placed in you after you have become “brain-dead”.

Solution:  Prepare for the potential of your incurring a terminal illness.  Have a Living Will drafted according to your desires.  A Living Will includes whether to keep giving you food and water when that will only prolong the process of your impending death.  Your Living Will can also include your directions to emergency medical personnel not to resuscitate you in the event of a medical emergency and death is already upon you. This directive is often referred to as a “Do Not Resuscitate Order”.

Problem No. 10:

Relying on Cheap and Ineffective Estate Planning 

You may have decided to “save money” by downloading cheap “one size fits all” estate planning documents from the Internet.  Or you may have chosen any general lawyer to draft your estate plan solely because his or her fee is less than the experienced Estate Planning attorney charges.  Never make the mistake of depending on pre-printed, “cookie cutter” estate plan online forms or “cheaper lawyer” services for your estate plan. You may think you have purchased what you need. But it will be your family and beneficiaries that will have to clean up the mess, and pay a higher price when you’re gone. You see, after you die, your family members will try to use your cheap documents to settle your estate. And if the documents weren’t drafted correctly to meet your circumstances, they will cause additional expense and long delays because a Probate will then have to be filed just to have a judge fix the mistakes in your estate documents. 

Solution:  Your East Orlando Estate Planning attorney can review your family Estate Plan with you. Call The Mendez Law Firm at (407)380-7724 or email us at mail@themendezlawfirm.com . The Estate Planning consultation is FREE, and there is NO obligation. 

Conveniently located in the East Orlando area. Call The Mendez Law Firm TODAY at (407)380-7724 or email us at mail@themendezlawfirm.com to schedule your FREE family Estate planning consultation.