By Cindy Tansin
If your estate is less than $150,000 total, including your home, you are among the rare few who do not need to read this article. Everyone one else, pay attention. This eye-opening information was shared by my colleague Steven M. Greenwood, Attorney and Estate Planning Specialist. It made me look at my responsibilities to my family in a whole different way.
1. Court
Your family will need a court order to access your funds if you become incapacitated or die. Does your family have the ability to take care of your pets, pay your mortgage and other obligations, and, God forbid, pay for your funeral expenses if you unexpectedly meet with ill fortune? If they are dependent on you, how will they take care of their own needs? You can avoid these hardship by being prepared.
2. Probate Costs
The costs of probate court are substantial. For example, an estate with a gross worth of $1,000,000 will see costs around $46,000. It doesn’t matter if $900,000 of it is obligated by a mortgage. Since family members are bound to the court’s rulings, they might have to incur legal fees to seek legal representation if they wish to dispute the court’s rulings.
3. Time
Depending on the complexity of your estate and the complexities of your family, probate can take months or years to resolve. The court will name an executor to your estate, and what if they appoint the loudest and most willful family member instead of the one who would be most equitable or perhaps most deserving. A family member or a disgruntled heir can contest their portion of the distributions, and this adds time and cost to the settling of your estate.
4. Your Legacy in the Wrong Hands
If you fail to spell out exactly how you want your estate to be divided, the court may make the obvious first choice, such as awarding everything to a surviving spouse, but is that what’s best and what you want? What happens if he/she remarries? Will the inheritance then pass to the children of the other family? What if he/she becomes incapacitated or dies? Will your children have to go through the courts again and start the whole process all over? Joint tenancy or even naming beneficiaries doesn’t prevent the problem of someone ultimately being left out of an inheritance that they should have been part of. There’s only one way to make sure your children and grandchildren will be the ultimate beneficiaries of your estate.
5. Do you have assets in multiple states?
Properties owned in multiple states can be subject to multiple probate courts. So the vacation homes and the investment properties now become issues of their own, and probate activities, time and cost are all multiplied by the number of states involved.
We all know that it’s not a question of if – it’s a question of when. We are all going to die. To do so with no thought or preparation for our loved ones can be problematic and even irresponsible. It could cause an otherwise harmonious family to come apart. A good estate planning professional can suggest planning options that are appropriate for you. Get some peace of mind, but more importantly, do your family a solid by taking the worry, hassle, and expense of your demise out of their hands.
Cindy Tansin is a mortgage professional author of the book Lead With Your Heart and the Rest will Follow, and a regular blogger on Huffington Post and LinkedIn. Her expertise is in promoting personal growth, professional growth, and financial soundness.