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 » Why You Need An Estate Plan

Why You Need An Estate Plan

By: O. Reginald Osenton, Esq
President, Olivero Law

It is odd that many people plan their funerals, but those same people have not planned their estates. In fact, the majority of Americans do not even have a will. We have heard numerous reasons why people do not have an estate plan. This white paper will present a sampling of those reason, as well as our typical responses.

My children will do the right thing.
Fortunately, most parents are correct when they make that statement. However, we have seen many cases where, after a parent dies, greed takes over and the children do things the parent never dreamed of. In fact, in one case two sons fought over their father’s Cleveland Browns jacket. That’s right, a lawsuit was started over a jacket!

My estate will not have to pay estate taxes.
This statement is true in the majority of cases. Current tax law provides that no estate tax will be due if you die in 2010. Unless Congress makes revisions to estate tax law, beginning January 1, 2011, estates worth at least $1,000,000 will be subject to estate tax. Moreover, tax law also provides that many assets which common sense tells us should not be included in our estates are added. For example, the death benefits paid to your heirs at your death on life insurance policies you own typically are added to your taxable estate. In addition, there are many non-tax reasons to plan.

My spouse will inherit everything from me.
This statement is true in many cases. However, what if your spouse or you have children by a prior marriage? What if your spouse and you die simultaneously? What if your spouse remarries after your death? What if your minor child decides to drop out of school? A properly drafted estate plan addresses these and other “what if’s.”

I told everyone what I want.
Memories fade. People hear what they want to hear. In the suit over the Cleveland Browns jacket, each son testified, under oath, that his father told him that he wanted him to have the jacket. If you want to ensure that your property goes where you decide, the only way to do so is through a properly drafted and executed will or trust.

It is too complicated.
You do not need to have any special legal skill or knowledge to have an effective estate plan. Generally, all you need to do is tell your attorney (who should be experienced in estate planning matters) what goals you want your estate plan to accomplish, and let the attorney draft your documents accordingly.

I already have a will.
This statement raises two concerns. First, if you already have a will, you should review it at least annually to ensure that it still expresses your wishes. In fact, in many cases we review our client’s will and suggest no changes. Second, a complete estate plan has much more than a will. Although a properly drafted will is the cornerstone of any estate plan, your plan also should have a power of attorney and a designation of health care surrogate so that you can designate who will handle your business and who will make medical decisions for you if you become incapacitated. You also should have a living will to you’re your doctors to not keep you alive artificially, like using a respirator. Many estate plans also include trusts established for any number of purposes, such as saving taxes, minimizing probate, or planning for young or special needs heirs.

I will do it later” or “I’m too busy.
Except in cases of imminent death, there is no great rush to complete an estate plan. The plan should be well thought out and done at a reasonable pace. However, you do not want to wait forever. If you lose your ability to understand the nature and effect of your estate planning documents, you will be prohibited from signing them. For example, if you lose your mental capacity because of Alzheimer’s or an automobile accident, you will not be able to execute an estate plan.

I don’t want to think about it.
No one wants to think about the inevitable. However, many of our clients express their sense of relief when they execute a plan, and satisfaction that they do not have to worry about not having a plan anymore.

It is too expensive.
It is no secret that lawyers are expensive. However, our fees for completing an estate plan are probably less than you might think. In addition, think about how much money your heirs could save in taxes, legal fees, and other costs if you have a properly drafted estate plan. Think about how much those sons who fought over the Cleveland Browns jacket paid in legal fees. Had their father prepared an estate plan, such an expensive, stressful, and petty lawsuit could have been avoided.

Author Bio
Reginald Osenton is President of Olivero Law He has practiced law for over 20 years, and has an active estate planning practice, assisting many clients in developing their estate plans. He also has been involved in many cases when our client’s loved one has died leaving an inadequate estate plan, or no plan at all.

Posted on Tuesday, August 31st, 2010 at 10:17 pm under Estate Planning.
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