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Question: My mother seems to think that because my siblings and I get along well that no estate planning on her part is necessary and we can just take care of everything together when she passes. I am trying to convince her that tough decisions in the best of families can cause conflict and put strain on relationships. What can I tell her to make her understand how important her involvement is now, even if she doesn’t have a lot of money?
Answer: You may hear a lot about retirement planning. Estate planning is an essential part of retirement planning, although many people are not aware of all that it encompasses. So they put it off until it is often too late. Let’s take a look at what estate planning addresses and why it is important to begin it ASAP.
Estate planning addresses these key questions:
These are important questions and virtually everyone will answer “yes” to all of them. Making arrangements to satisfy each question is what estate planning is all about.
But what is especially important is making arrangements to address these questions as soon as possible because of these four circumstances:
Consequences of not addressing these questions are:
Incapacitation: You are treated in a manner you would never wish to be. Someone other than your choice determines how your money is used and distributed.
Your assets go to someone not of your choice: With no will, your assets will be distributed according to state rules–not your wishes.
Without a trust, you must trust your current spouse to give assets to your previous children.
Long-term care: Without long-term care insurance or a lot of wealth, paying direct long-term care costs easily can wipe out a small estate.
Gift and estate taxes: If your estate is worth more than $1 million dollars, estate and gift taxes in years beyond 2010 can rob up to 55 percent of the excess.
Probate: Public exposure on who is getting what can trigger legal claims and hard feelings between potential beneficiaries and other relatives.
Steve Wright is managing member of The Wright Legacy Group.