Cindy thought about estate planning for a long time, but when she was finally ready to make an appointment with an estate planning attorney to talk about it, she read that the estate tax at the federal estate tax threshold was over $11 million, and the Illinois estate tax started at the $4 million level.
“What am I worrying about,” she thought. “I’m not anywhere near that level! So my estate isn’t subject to an estate tax anyway. That’s for wealthy people to deal with.”
Not long after, Cindy got in a car accident where she was severely disabled. Her family members were distraught and jumped in to try to act on her behalf. Unfortunately, that’s where the problems began. Though her family all wanted what was best for her, they could not agree on what that entailed. Since Cindy hadn’t done any estate planning, nobody knew her true wishes on healthcare for herself, and she hadn’t designated anyone to act on her behalf. Consequently, dealing with doctors, hospitals, and insurance was a struggle.
Estate planning is for everyone who want to invest in continuity and stability for themselves and their family.
Let’s take a closer look at some of the reasons why estate planning is important, regardless of income level or net worth.
• Healthcare Planning
In the example of Cindy and her family, an estate plan can include healthcare planning. In the event of a disability or incapacity, somebody can step in and act based on instructions that are already written out. That way, the choices that you would make for yourself and take the actions that you would want taken can be implemented by the person designated to step in and help. Estate planning can also give designated people access to medical records so that doctors and hospitals can communicate with them. Some examples of healthcare planning documents that can be implemented include the healthcare power of attorney, living will, HIPAA authorization, and other advance directives.
If you pass away or are incapacitated, who is going to take care of your children if they’re under the age of 18 or have special needs and can’t be left alone? Estate planning can help you nominate the individual you would like to see designated as guardian for your children. It also helps you think through who best would match your values, the needs of the child, and how care would be funded. Other considerations may include whether the potential guardian is good with children, responsible with money, and has a stable home and work life. Making a careful selection among those qualified and willing to act can minimize the impact of the change on the child.
In contrast, failing to address the question of who to appoint would not make the question go away should the need arise. Instead, there is a chance that your family will be involved in a heated dispute over who should be the guardian of your children – and this is a period of time when the children are going to need as much stability as they can get. Prolonged court activity is not what will bring stability quickly. Or perhaps no qualified family member or friend of the family emerges, and the court appoints someone with no prior relationship to the child or the family. That’s usually a less desirable outcome than making a decision as far as who in the family is qualified and willing to take on that role.
• Avoiding Probate
Probate is a process by which a decedent’s affairs are settled, debts are paid and property is distributed. It can take a significant period of time, and it is a public kind of proceeding. Estate planning offers opportunities to implement trusts and other structures that may reduce or eliminate the need to go through probate. Without estate planning, probate should be expected for people who own any real estate, or who have assets of $100,000 or more. That figure applies to everything, including cars, bank and brokerage accounts that are held in your name, any art, jewelry, or collections, household objects and furnishings, and more. With a lifetime of working and accumulating assets, it doesn’t take long to reach this threshold.
Stability. Continuity. A strong family. These aren’t things that should be reserved for the very wealthy. Every person deserves it and estate planning is a key tool to deliver it from one generation to the next. So whether you’re just starting out or have a high level of assets, Windy City Legal can help you customize a plan that addresses your needs, and identify any areas that need to be re-aligned. By having a discussion of what you have and what can be put into place, Windy City Legal can show you why estate planning is an outstanding investment in yourself and your family.