You may think you’re too poor or too young to consider having an estate plan, but you’re not. These are a few of the assumptions many people in Los Angeles make when they think about wills and trusts, health directives and estate planning strategies.
Regardless if you have assets or not, a will is valuable guidance for the people you leave behind. Assets are distributed to heirs through wills. Even if assets are minimal, consider a will to assign a guardian for your children. Without a will, a court will decide who will raise your children. With a will, you have that power.
Well-off individuals are not the only ones who must pay attention to the estate tax rate. The estates of people who die in 2012 must be larger than $5.1 million to become federally taxable. That makes most estates tax-free — this year.
It’s possible that the federal estate exemption could fall to $1 million. While that seems like it would represent a lot of assets, it really doesn’t. Combine the value of a house with a savings, stock or retirement plan and $1 million adds up fast.
Estate planning is not just about death. Documents also include health care directives and financial powers of attorney. These documents assign a person to make medical and money decisions for you, if you become unable to choose.
Many people fear not having a will because they believe the government will take their assets. Courts don’t keep assets; they determine who should get them.
Most wills are public documents, which means anyone can contest the contents in court. People believe trusts are needed to avoid probate. In fact, several assets never go to court including life insurance, most retirement plans and jointly-owned real estate.
Some Californians believe they will save money through do-it-yourself estate planning websites. Not necessarily. Documents found online may be generic or outdated and there are no legal advisors standing by in case you have a question or make an error.
Source: forbes.com, “10 Common Estate Planning Myths That Can Be Detrimental to Your Family,” Erik Carter, Oct. 3, 2012