The Three Key Benefits to Estate Planning
There are three key benefits of estate planning. They are: Avoiding Conflict, Avoiding Delay, and Avoiding Expenses. As you think about your estate planning, it is important to honestly assess your situation to see which of these benefits are most important. I will take you through each one to help you make that decision.
Avoiding Conflict
If you are like most readers, your mind immediately conjures images of children arguing over mom and dad’s estate. Everything from minor tiffs to full-blown law suits with an attorney for each heir. In my career I have seen the full range:
- hurt feelings,
- threats of violence,
- allegations of incompetency,
- theft of estate assets, and
- even a refusal to settle an estate based on a ten-year-old dispute about payment for a broken-down lawn tractor.
Simply put, there is no way to guarantee an estate will be free of conflict between heirs but the more specific and enforceable the planning, the more likely the heirs will see the wisdom of working toward a resolution of their grievances (whether real or imagined).
While you might not have immediately thought of them, there are other conflicts which can be avoided with proper estate planning. Do you have a child needing protection from himself or herself? It could be a substance abuse situation, or a problem handling money responsibly, or even a special needs situation where the receipt of an inheritance could disrupt benefits. Or maybe one of your heirs is struggling in business and may face a bankruptcy? Or it could be a child is in an unstable marriage and you are concerned an inheritance could be a part of the divorce proceedings.
And there may be even a more basic conflict: what if you and your spouse don’t agree on how to handle the distribution of your estate? This can be a thorny issue in second marriages and blended families.
Taking the time to plan your estate can address, and possibly eliminate, most of the conflict “landmines” that can occur. Think through the issues. Discuss them with an attorney. This eases your mind and gives you peace of mind knowing you have done your best for your heirs. In addition, it also allows you to prepare heirs with how you have structured your estate, if you decide you want to do that.
Avoiding Delay
When the owner of an asset passes away, how long do you think it takes to transfer the asset to the new owner? Some things are transferred almost immediately. Some are transferred within a few days or weeks, some within a few months. But others can take a year or more.
What makes the difference between sooner rather than later? Careful planning. Each asset must be considered individually, one at a time:
- Car
- Bank account
- Home
- Time share
- Business
- And more …
Typically, the more important the asset, the more planning you will want to have in order to control the timing. You will be less concerned if your heirs have to wait for the car title to transfer, but more (much more) concerned if your business staggers or fails because the accounts and control are not transferred in a timely manner. It is true in many situations that timing is everything.
Avoiding Expenses
Typically, expenses are a byproduct of conflict and delay, but sometimes expenses are self-generating. The less planning that is undertaken, the more your heirs will need the involvement of the courts, attorneys, accountants, etc. And these all come with a cost.
In addition, there may be expenses that come about to maintain assets such as fees to maintain the lawn, sell a property, or even to prepare a property for sale by remodeling, sprucing up, or making repairs.
Now that you have some understanding of the three key benefits of estate planning, take some time to consider how these fit in with your particular situation. Once you have an idea of how you would prioritize these benefits in order of importance for your circumstance, we can move on to the next step. That would be thinking about some of the biggest obstacles to estate conservation, which include attorneys, taxes and probate.
As always, as we continue on through the process, if you have questions, please do not hesitate to contact me.
Troy
Next up: Part 3 – The Probate Process – Attorneys
Common sense applies: Just because I post this and you read it does not make me your attorney and does not make you my client. Every situation is unique and you should always consult an attorney when creating legal documents.