When people think of an “Estate” they might think of a mansion like the one above or a portfolio of assets worth millions of dollars. They believe that estate planning is not necessary unless you have a large estate with lots of assets.
This is a dangerous belief which can lead to devastating consequences. The reality is that small estates need estate planning just as much (if not more) than large ones.
Your estate refers to all the assets or claims that you own at the time of their death, regardless of the value. For example, your home, car, and bank accounts are all part of your estate.
An objective of estate planning is to transfer assets to your beneficiaries as efficiently as possible. By reducing the costs of settling your estate, you leave more for your beneficiaries.
Not planning at best makes the process more expensive, but at worst causes the loss of assets entirely.
Large estates can afford the expenses of probate and still leave plenty of assets to the beneficiaries; a small estate cannot.
Here are two examples that we see where failure to plan results in devastating losses.
Surviving Spouse Loses
You may intend to leave your entire estate to your spouse. But under the laws of inheritance, it could be the case that your entire estate will go to your children, not your spouse. This means your spouse would only keep their one-half of the community property and would get none of your separate property. This is especially devastating when there is significant property owned before the marriage.
Money is Abandoned
If you own a bank account and fail to designate a beneficiary, then when you die the money in the account goes to your estate. The bank will require a court order to release the money, which requires going through probate. Sometimes, the cost of probate will exceed the balance in the account. Most of the time when this happens families will simply abandon the money and let it go to the State.
Both of these scenarios can result in significant loses to family members, but can be easily avoided by establishing an estate plan.
If minimizing the costs of settling your estate and maximizing the gifts left to your beneficiaries are important to you, then you must implement an estate plan.
We help people design, build, and execute custom estate plans that are optimized for efficiency and ease of use. If you would like to schedule a Planning Session, give us a call at 956-630-2999.