Estate Planning for Middle & Lower Income Families
People who are diligent take the time to plan for important events and seasons of their lives. We plan for vacations. We plan for holiday get-togethers. We plan for retirement. We plan our weddings. For a new baby to arrive, and for that child’s college education. Many of us use daily planners to structure our days and ensure that we follow our schedules. There is one type of planning that a lot of people overlook, however – estate planning.
One of the primary reasons that a lot of people dedicated very little (if any) time to this area is the common misconception that estate planning is only for the wealthy. Individuals who are not considered “rich” often believe they do not need to worry about planning their estate, because you have to have millions of dollars in property and assets before estate taxes become an issue.
What many people fail to realize is that minimizing tax liability is only one aspect of an estate plan. There are a number of other potential issues that your heirs might need to address and having a plan in place helps ensure that your final wishes are carried out to your specifications and with as few complications as possible.
The fact is that everyone should have a plan in place for when they die or become incapacitated, and here are five reasons why estate planning is important:
- Minimize/Eliminate Probate Expenses
A lengthy probate process can be very costly for your heirs, especially if they don’t have anything written out by you ahead of time to guide them. When this is the case, they will probably incur significant legal expenses to file the necessary paperwork, go through court proceedings, and complete all of the other tasks necessary to settle the estate.
In Virginia, there are ways to avoid probate for most larger assets. For example, the Commonwealth allows payable on death (POD) designations for bank accounts, and transfer on death (TOD) registration for securities, real estate, and vehicles. Using these designations can help ensure that the major assets that an average person would have go directly to their heirs upon death.
For those with a sizable amount of assets and/or more complicated finances, setting up a trust that automatically transfers their assets to beneficiaries upon death would probably be a better solution. There are a number of different types of trusts that can be created, depending on what you are trying to accomplish.
- Specify Which Heirs Receive What Property
If you die without a will or other estate planning documents, the courts will ultimately decide how to distribute your assets and property based on Virginia intestate succession laws. This generally means that your property goes to a surviving spouse, children, parents, and siblings in that order.
What if you do not want all of your intestate heirs to receive your property? And what if you want to leave property to someone who is not a relative? Another related question – what if you want your minor children to wait until they are 21 or older to receive their inheritance? With an estate plan in place, you are the one who decides the answers to these questions rather than a disinterested court.
- Decide on Care for Minor Children
If you have minor children, then you should definitely have a will at the very least. One of the things you can do with a will is designate a guardian to take custody of your minor children if something happens to you before they become adults. If you do not have a will, that same disinterested court will be the one to decide who raises your children.
- Plan for Potential Scenarios Prior to Death
Estate planning is not only about planning what will happen after you die, it also involves preparing for possible future circumstances in which you may no longer be able to make decisions for yourself. While you are still of sound mind, it is wise to create a document that designates a power of attorney (POA) for financial decisions, and one for healthcare decisions. These, of course, should be individuals you fully trust to carry out these duties, and you can designate the same individual for both areas if you choose.
Another important estate planning document that accompanies a healthcare power of attorney is a living will. A living will is an advance health care directive that informs loved ones and medical professionals of your wishes regarding the types of medical care you would like, and the types you want to refuse in the event that you become incapacitated.
- Minimize the Chances of Conflicts Among Surviving Relatives
Without an estate plan, the chances of property disputes among relatives increases exponentially. And when these disputes happen, expensive probate litigation is often the only way to resolve them. Lack of an estate plan is a major reason for probate litigation, and another common reason is lack of clarity because the individual used free or cheap online templates that did not adequately express their wishes.
The best way to ensure that your final wishes will be honored without costly legal disputes is to plan things ahead of time with an experienced estate planning attorney. We understand that most people would rather have a root canal than talk to an attorney about scenarios that would occur after they are dead or incapacitated, but nonetheless, it is well worth putting in the time upfront so that your heirs will be able to settle your estate more smoothly after you are gone.
Contact Buck, Toscano & Terezkerz to Discuss Your Estate Planning Needs in Virginia
if you do not have an estate plan in place and you want to set one up, Buck, Toscano & Terezkerz is here to help. To get started, call our office today at (434) 977-7977or message as online for a personalized consultation with one of our attorneys.