I lost my cousin last month. She was only in her forties, and it crushed us. I know. Not the typical start to a CPA firm newsletter, but it prompted me to think about a topic I rarely ever bring up-Estate planning. Regardless of whether or not you are among the ultra-wealthy, you need an estate plan. As recent news has shown, even those who have won the lottery or have substantial wealth can fall victim to poor estate planning. Celebrities do this all the time:
Chadwick Boseman. Prince. Amy Winehouse. Heath Ledger. Aretha Franklin. James Dean.
While federal estate taxes may not concern you, you need a will to have your wishes honored after your death. Without a will, state law dictates the distribution of your assets, which may not align with your intentions. If you have minor children, a will allows you to name a guardian to care for them in the event of your untimely passing. Your heirs will want to avoid probate because it can be a costly and time-consuming legal process.
A living trust gives you a valuable tool to avoid probate. By transferring legal ownership of your assets to the trust, you can ensure that your beneficiaries receive them without suffering through probate. You can amend your living trust as circumstances change, providing flexibility and control over your assets. It is essential to keep your beneficiary designations up-to-date, as they take precedence over wills and living trusts regarding asset distribution.
Additionally, if your estate has the potential to suffer from federal or state death taxes, you should plan to minimize your exposure. Estate planning is not a one-time event. It's a process that you should review and update regularly to accommodate life changes and fluctuations in estate and death tax rules. I recommend you check your estate plan annually to ensure it aligns with your wishes and circumstances. I get it. No one wants to talk about death, but you owe it to your loved ones to have a plan in case it happens.
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