Estate Planning Using a Will: Pros and Cons
How a will works in conjunction with your estate plan
An Estate Plan is a plan, clever enough for your unanticipated life events and dull enough to think your heirs merited what you left them. Most people perceive a “will” as their estate plan in its entirety. Many also believe that a properly executed will naming heirs to your assets is enough to overcome the challenges deserving of who get’s what after your death in satisfaction of what they think you owe them. Not to exclude the IRS and other agencies.
After the widespread litigation and underemployed lawyers, a will in its simplest description, is nothing more than a wish list of their dreams because it’s easier than self-deceit. A will can be contested, must be probated (made public) so that the wish list can be challenged by heirs, and all potential real and unexpected creditors. The cost, time delays, and subsequent clearance of all real and not so-real challenges to the probate process. A will, properly drafted or not, is worth the flush of toilet paper, says Rocco Beatrice, Managing Director for Estate Street Partners, Boston.
A good estate plan, must:
- Eliminate potential frivolous lawsuits from known present, past, and unknown future potential creditors, including IRS and other government, or quasi-government agencies i.e. Medicaid.
- It must consider the income tax consequences up to and after the death of the individual’s accumulated wealth. It must be able to reduce, if not eliminate, the gift tax consequences, the income tax consequences, the estate tax consequences, future generation income and ad-valorem taxes, and must be flexible enough to accommodate future legislated assaults.
- It must consider your family dynamics of present and future generations. Age of the individuals owning the assets, minor children, future generations, provision for incentives for how, when, and circumstances of distributions. What if you have a rocky marriage, second marriage, minor children requiring guardianship, ungrateful or problem children, children of a prior marriage, rocky marriages of your adult children, financial capability of your children, legal entity ownership of your assets, higher than normal risk of owned businesses, complicated financial arrangements, future income streams, your personal needs and desires.
- It must consider government present legislation and compliance, future legislative proposals, regulations, taxation, and other general assaults on your wealth.
You get what you pay for. A will is cheaper than a full blown estate plan requiring professional due care addressing past, present, and future considerations. A will can cost you anywhere from $250 to $2,000 but changes nothing, because title to your assets remains with the most exposed individual, you. Anything titled in your name, or associated, or remotely connected to your name, is subject to a frivolous lawsuit or worse, judicial or legislative confiscation i.e. Medicaid, taxation, or regulation. That’s why I state, a will is not worth the paper it’s written on.
A good estate plan will:
- Reposition your ownership / legal title to your assets.
- Eliminate probate.
- Eliminate or reduce frivolous lawsuits.
- Eliminate estate taxes.
- Eliminate the Medicaid spend-down provisions and related state recovery.
- Reduce your current and anticipated future income tax liability.
- Take advantage of current reportable gift-tax exclusions ($5,250,000 for 2013) and anticipate compliance or the elimination of future law changes.
- Dictate from your grave, the disposition and use of your assets.
- Provide incentives for your children or other heirs.
- Be flexible to make changes as they become necessary to be in compliance with new laws and regulations.
- Be in compliance for the next 100 years.
- Provide a back-up exit plan.
The largest benefit of a will is it is an efficient way to choose a legal guardian for a minor child, therefore those with minor child should include a will as a part of their estate planning. Hire a professional to do your estate planning. One that has the intellect to distinguish a robotic, one size fits all, copy and paste, … to experience gained by gray haired experience and creativity driven by hunger, love, pain, and fear.
A comprehensive estate plan is imagination meeting reality.
Protect your assets for yourself and your children and beneficiaries and avoid tax dollars. Assets can be protected from frivolous lawsuits while eliminating your estate taxes and probate, and also ensuring superior Medicaid asset protection for both parents and children with our Premium UltraTrust Irrevocable Trust. Call today at (888) 938-5872 for a no-cost, no obligatioin consultation and to learn more.
Rocco Beatrice, CPA, MST, MBA, CWPP, CAPP, MMB – Managing Director, Estate Street Partners, LLC. Mr. Beatrice is an “AA” asset protection, Trust, and estate planning expert.