Believe it or not, you have an estate. In fact, nearly every adult does. Your estate is made up of all that you own— your home, checking and savings accounts, retirement accounts, life insurance, furniture, personal possessions, etc. No matter how big or small – we all have an estate.
Estate planning is really just the process of setting up several types of very specific documents to help determine where your assets will go and who will help control them. For example, if you want to ensure that your property will be used for your minor children or ensure your children don’t get a large sum of money at the age of 18 – you need an estate plan.
Do I just need a Will?
While creating a Will is often a great start and works for some people, it does not avoid probate. Probate is the court process that your assets must go through when you pass. It involves attorneys, court hearings, and many unknowns for your family. As you can imagine, it is stressful and emotional.
It is also very expensive. During the probate process, your family will pay attorney’s fees, court fees, appraisals, bond premiums, accounting fees, publication fees, and so on. Typically, probate will cost about 5% of the gross estate.
That means that for a $500,000 estate, probate will cost your family $25,000! That is much, much more than it will cost you to get a comprehensive and well-drafted Trust.
What about a Trust?
One of the biggest advantages of a Trust is that you save your family the stress and cost of probate, which usually means more of your hard-earned money goes to your children. Another huge benefit is that with a Trust, you can plan for incapacity – like if you are in a serious accident and can’t make legal decisions. A Will only works if you pass away.
A Trust also allows for more effective planning for minor children, and trust administration is completely private – unlike probate. Wondering what would be best for you and your family?
I would love to sit down with your family and help you figure it out. Because I believe this planning is so important, I will waive the initial meeting fee (also called the Family Legacy Planning Session) for those who mention this article.