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Estate Planning Basics

Estate Planning Basics |The Dirty Truth About Estate Planning

In this section from his book, “Pankauski’s Probate Litigation: Top 10 Estate Mistakes Revealed”, John Pankauski explains why taking the time to plan your estate as soon as possible can be extremely beneficial in the long term.

Mistake: spending oodles and oodles of cash to get a“top notch,” “state of the art,” high dollar, big ticket, e-plan.

A will, a revocable trust, POA (Power of Attorney), and a set of health care and guardianship documents will work just fine. They also let you keep your money and control – as best as you can.

The real challenge is determining whether you care about what happens to your money when you’re gone and, if so, how you set up your estate plan, to manage and distribute that money.

This is all about wealth administration after you’re no longer around.

Who needs complex or sophisticated estate planning any more? For 99% of Americans, a trumped-up, complex estate plan with lots of bells and whistles – or large legal bills from your probate lawyer – is totally unnecessary.

The truth is that each American can give away $5.4 Million completely free of the dreaded US estate tax, so often feared, hated, and written about with unbridled despair.

That’s right – in one sense, the US estate tax does not apply to most Americans – the vast majority of us can avoid it fairly easily.

The days of needing complex estate plans, or sophisticated tax planning aren’t necessarily over, but they are few and far between. In fact, the US estate tax has come a long way from just the 1990s – when you could only give away $600,000 free of the US estate tax…and a top estate tax rate of 55%!

Today, you and your spouse can get a complete, thorough, and comprehensive estate plan capable of sheltering you and 99% of all Americans from the US estate tax for somewhere between $2,500-$7,500.

What a bargain!

If you also want an irrevocable family trust created now, rather than at your death – or if, perhaps, you’d like some type of life insurance trust, you’ll spend another $500-$2500.

If you spend a lot of time talking to your estate planning attorney or his or her support staff; if you ask repeated questions or have multiple conferences, and you need to review and re-review drafts and re-drafts of your trust repeatedly, your legal bills will be higher. After all, lawyers

don’t have a product to sell: they sell their knowledge, insight, perspective, background, education, and experience – in other words, they sell their time. The more of their time you use, the more it’s going to cost.

The Role of the Estate Planning Attorney

So, much of the important work for most good estate planning attorneys has changed. While estate tax, gift tax, generation-skipping transfer tax, and the income tax are all still very important in the estate planning process, probate lawyers’ work has shifted.

Tax planning has gotten simpler, because you can now give away over $5.4 million without a gift or estate tax kicking in. What, then, now occupies the bulk of your estate planning attorney’s time?

Perhaps a better question is: what should occupy the time of your estate planning attorney?

The answer: Wealth administration.

How will your heirs, next of kin, beneficiaries, loved ones, and family members receive – and use or misuse, manage or mis-manage – their inheritance?

Are you going to leave an inheritance outright and, in essence, have the executor of your estate or the trustee of your trust simply cut a check to your beneficiaries? Or, as we like to say in our West Palm Beach probate litigation law firm, “Are you going to throw your money in the laps of your beneficiaries and hope they don’t blow it?”

Wealth administration encompasses a host of challenges concerning how your money will be “run” – or managed – when you’re gone…if you even care: after all – you’ll be dead then.

Controlling from the grave?

If you care about how your money will be spent after you’re gone, you’re probably going to spend a lot of time with your estate planning attorney discussing whether you’re going to create an estate or more trusts – or not. If you decide to create trusts, you’re going to spend even more time discussing the terms of those trusts and who the trustee is ultimately going to be.

In other words: who will you leave in charge of your money?

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