Eight Reasons – NOT – to have an estate plan.

If this one is too long for you, by all means, skip directly to number 8!!

1. You enjoy paying taxes. Maybe you believe that giving 40+% of your life savings to the government is a good use of that money. Your family can probably live on the fraction of your money left over.

Most people have heard that the federal estate tax exemption is over $5 million ($5.34 in 2014 and $5.43 in 2015). So, if your estate is comfortably under that there will be no tax consequences, right? Pennsylvania has an inheritance tax that is separate from the federal estate tax (see #2 below for more on this)*. Also, if you have a appreciated assets or a retirement plan and your heirs cash it out, it could have disastrous capital gains and/or income tax consequences.

2. You believe that State representatives know how to plan your estate better than you do. You voted to elect these officials, so why not let them make laws that will distribute your estate.

In Pennsylvania, if you’re married with children and you die without your own estate plan, the government has decided how your estate will be distributed. So, let’s say your two kids are 3 years old and 1 years old, respectively. Under the law, the first $30,000 goes to your spouse. Then the balance is divided 50/50 between your spouse and your children. You want your minor children to get 50% of the balance of your estate immediately, right?

*The 50% that passes to your children will be subject to Pennsylvania Inheritance Tax. There will be no inheritance tax owed on the first $30,000 and 50% of the balance that goes to your spouse. Wouldn’t it be better if 100% of your estate was not subject to inheritance tax, which would give your spouse that much more money to take care of your children?

3. Your minor children will be in good hands with a state agency.   You don’t need to name a guardian for your children. The Department of Children and Youth Services will be fine.

Avoid this. If for no other reason, make an estate plan to name guardians for your children.

4. You don’t want to have any say in how your spouse and children use their inheritance, they can just have it and enjoy it.

Your spouse and children will enjoy their inheritance a lot more if you have a plan to preserve assets for them and protect those assets from creditors, predators, and the heirs themselves. With an estate plan, you can protect your assets from the bad things in the world and make sure they are available to your loved ones.

General Needs Trusts, Special Needs Trusts, Retirement Trusts, Generation Skipping Trusts, Asset Protection Planning, Charitable Planning, and Business Succession Planning can all be accomplished by putting a comprehensive estate plan in place.

5. You’ll just make all your accounts and real estate joint with your kids. Why should you have an estate plan when you can just do this?

Adding your children as joint owners of bank accounts and real estate can cause serious issues such as: gift tax consequences, capital gains tax issues, and subjecting all of your assets to your children’s creditors. This is also problematic with regard to Pennsylvania’s Inheritance Tax laws.

6. You made a will 20 years ago and just wrote in the changes you wanted to make.

Making any marks on your will can invalidate the will or make it inadmissible in whole or in part to probate. At the very least, it will complicate matters with the probate court and could lead to disharmony in the family.

Avoid probate altogether with a living trust. Probate is a very public affair. Anyone can get a copy of your will from the probate court. The probate process takes at least 12 months to complete, and can incur hefty legal fees.

Maintain privacy and family harmony by having a trust in place that passes your property outside of the probate court.

7. You don’t have a lot of money and own very few assets, so why bother?

Estate planning is not just for the rich. Estate planning is not just about death. Estate planning is as much about lifetime planning as it is about wealth transfer on death:

  • Incapacity/Disability Planning
  • Health Care Powers of Attorney
  • Durable General Powers of Attorney
  • Living Wills
  • HIPAA Authorizations
  • Guardian Designations

8. You don’t plan on dying anytime soon.  

I hear this one a lot. Here’s my counteroffer: Estate planning is not about dying; it’s an act of love. You make an estate plan because your loved ones need you to. Put a plan in place for your loved ones. You’ll feel good about doing it and they’ll be taken care of.


0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply