— Johnson Fistel, LLP (@JF_LLP) October 28, 2022
“Everyone dies, but not everyone truly lives.” – William Wallace, Braveheart
And not everyone has a functional estate plan in place when they die. A carefully crafted estate plan can save your family, heirs and loved ones a tremendous amount of time and money. In addition, it will help protect their privacy and keep your legacy secure from the general public.
If you were to die intestate – without a valid will – your estate would go through the probate process in accordance with state law. The probate court will take an accounting of all the assets and liabilities in your estate. The liabilities will be paid by the court, and any remaining assets will hopefully be distributed to your beneficiaries per the court’s determinations. Do you want to rely on a state bureaucrat to determine who gets your property? A will could identify your heirs and make the probate process easier for your beneficiaries, but your will does not void probate. Probate is an extremely lengthy process that opens your private estate up for the public to see. Everyone will know exactly what you owned, who you owed, and what was ultimately left to your heirs. Probate can be very risky and dangerous on many levels.
Setting up a simple will is relatively inexpensive; the cost for a simple will for the average household is $1-2,000. However, the only way to maintain your privacy after death is through a trust. Setting up a trust in addition to a will is also relatively inexpensive (perhaps another $2-3,000). Depending upon the size of your estate and your desire to keep your business private, it is generally an advisable and highly worthwhile investment.
Some clients try to circumvent probate by adding beneficiaries to the deed to their homes. This could be extremely costly if your heirs don’t receive the “step-up” basis on capital gains tax when the house is sold – they could ultimately end up losing much more value than the expense of creating a simple estate plan.
When comparing the cost to establish an estate plan versus the costs if there is no estate plan, it should be a no-brainer. For example, if you die intestate with a $1 million estate, it will cost you at least $50K in probate costs (and sometimes more if complex real estate or business interests are involved).
Establishing an integrated estate plan and trust could cost you less than a tenth of the expenses to your estate from probate. In addition, it simplifies the inheritance transfer process, may lessen family squabbles, and maintains your family’s privacy and security.
An estate plan is one of the best investments you can make for yourself and your family.