ESTATE PLANNING DIAGNOSIS SHEET:
13 REASONS YOU SHOULD
CONSIDER ESTATE PLANNING
You
might need estate planning if:
1. Either you or your spouse
have children from a previous marriage. When spouses have
children by a previous marriage, one spouse’s
children may get left out, or conflict may arise between
the step spouse and the step children, between the
children or between the parent. Do you have a current
plan in place to prevent this and promote peace in your
family?
2. You are self employed or
own rental property. If you are self employed or have
rental property, keep in mind that there is a significant
time delay before a personal representative is appointed
to care for rental property or your business in your
absence. Essentially, there will be a period of time
where your rental property and/or business have to go on
“auto pilot”. Are you ready for this?
3. You have minor children.
If anyone whom you wish to leave money is under the age
of 21, they will be unable to inherit your money in
Michigan without the Court appointing a Conservator to
make decisions for the minor. If this occurs, Court costs
can eat up a lot of a child’s inheritance. There is
also the issue that money the minor may need to live on
will be tied up for a lengthy period of time. Have you
properly planned for your minors?
4. You or a close family
member are terminally ill, have failing health or may
become incapacitated. If you or a close family member are
terminally ill or incapacitated, you will not be able to
make decisions on behalf of yourself or the family member
unless you plan ahead. If you have not dictated who can
make decisions for you and when they can make the
decisions for you, you are again doomed to the Court
making that decision for you. Proper planning will avoid
unnecessary spending on Court costs and you will be
ensuring that the person you trust the most will be able
to make decisions for you in the event that you are not
able.
5. You have a taxable estate.
The amount you can inherit free of taxes is currently
scheduled to increase gradually until 2010, when
ultimately, if there is no change in the current law,
there will be no estate tax. Estate tax rates vary from
37% to 55%. They apply to both single and married
individuals. With proper planning, you can easily avoid
unnecessary estate taxes. Does your current plan allow
you to do this?
6. You or a family member has
a substance abuse problem. If you have a family member
who is an abuser of drugs or alcohol, it is up to you to
prevent your money, more commonly known as their
inheritance, from being contributed to the local bar,
liquor store or drug dealer. Does your current plan
ensure that you will not be contributing to the problems
of your loved ones?
7. You have a child who may
not be responsible or is married to someone who may not
be responsible. Do you have inheritance protection for a
child who may be subjected to a spendthrift spouse,
divorce, lawsuits, creditors or bankruptcy? Do you have a
child who has a problem with shopping impulse control? If
so, there is a way that you can control and minimize this
risk through proper planning. Keep in mind that the
average inheritance, regardless of the size, is
completely spent within 18 months of receipt. Proper
planning on your part can help to preserve your wealth
for future generations and ensure that your hard earned
assets are not blown unnecessarily.
8. You have an IRA or a
401(k) account. Retirement accounts are almost never
coordinated with an individual’s estate plan, which
could result in a tax problem. It is important to put the
planning in place to ensure that these plans can continue
to grow tax deferred for future generations to come.
9. You own joint tenancy
property. If one joint tenant owner becomes mentally
disabled, the property may become frozen. Property may
also pass to unintended persons at death. Any person who
ends up with the property after the passing of a joint
owner may also find themselves inheriting a huge tax
liability. You may also be exposing your property
interest to unintended creditors. Proper planning will
prevent this from happening.
10. You have a disabled child
or are responsible for a dependent adult. Disabled
children and dependent adults require special planning to
ensure that they are not going to lose any public
assistance or benefits that they are currently receiving.
Are you putting someone’s government benefits at
jeopardy?
11. You have a simple will in
place now. Simple wills are not appropriate for everyone.
Used improperly, a simple will can lead to major
problems, including subjecting someone to unnecessary
estate tax. Even a simple will may fail if you have not
properly titled your property. Joint ownership may cause
a will to fail. Are you sure that a simple will is right
for you?
12. You have no planning in
place. If you don’t have a will or a trust, the
state of Michigan has written a will for you. Will your
property pass to those whom you want to share it with?
Will your estate be subject to litigation to decide who
gets your property?
13. You have an old estate
plan in place. The average estate plan has not been
updated in close to 20 years. Consider all the changes in
your life and in the law that have occurred over that
period of time. Will you miss out on a planning
opportunity by not keeping your estate plan up to date?