Why Is Estate Planning Important?
Quick quiz: which of the following is the most popular device for distributing the
estate of deceased persons?
- A last will and testament
- A revocable living trust
- State Law
You probably guessed "a", but believe it or not, the correct answer is "c"! That's
because most people die with no estate plan in place, which means that, whether
they realized it or not, they chose "c". The estates of people who die with no plan in
place are distributed according to what's called "intestacy laws." The intestacy
laws are state statutes, often decades or centuries old, which dictate how an estate
lacking a valid estate plan must be distributed.
This estate planning "option" contains many possible disadvantages. First, the inheritances
handed out under the law may not match what the deceased actually wanted. Second,
as the American Bar Association notes on its Web site, it is expensive. The probate
court must appoint someone to be the administrator of your estate, and the costs
associated of this process are greater than naming an executor in advance. These
expenses come out of the estate of the deceased before any of the heirs receive
anything.
So, as you can see, if you care about controlling who receives you assets upon you
death, and maximizing the amount your heirs and beneficiaries will receive, then
the "most popular" estate planning option may not be the way to go!
This Web site is intended for general information purposes only. It does not nor is it intended to constitute legal, tax or investment advice. United Financial Systems, Corporation is not a lawyer, registered investment advisor or investment advisor representative, and is not engaged in the practice of law or the business of investment advice.