I attend many networking meetings. At these meetings, I am generally invited to share a 30 – 60 second “commercial” of what I do and what I am looking for in a client, or a referral. I have several versions of this introductory speech, but one of them goes something like this, “My name is Michael Bailey, and I own and operate my own law firm. I practice in the area of estate planning law, which is dreadfully boring, but only when I am working there.” This generally gets me a laugh, and then I go on to explain that what I do is not necessarily exciting and fun, but rather, necessary.
In another version of my introduction, I describe what I do as :”talking on the phone, meeting with people, and reviewing and correcting what my assistant writes.” Again, this gets me a laugh, and lets the audience know that idea that what I do is important, yet can be reduced to the mundane.
Just because what I do is not all that exciting, the planning and what is accomplishes can be cool…here is how:
Reason #1 Why Estate Planning is Cool
You will Not Leave A Mess for your family.
Effective estate planning might not be easy and, depending on your point of view, can be expensive. In simple cases, a good estate plan may be relatively inexpensive, including the cost of drafting a will, living will, and powers of attorney. Some cases require a living trust and some other basic documents that every family should have.
More complex cases, involving multiple trusts, and different treatment of different assets classes, may cost significantly more. In all cases, having an estate plan is the best option for your heirs. Having no planning at all can be more expensive, and harder on the family you leave behind.
When a family member passes away without any plan, the survivors see first hand the time consuming nature of sorting everything out. This sometimes results in family fights and hurt feelings that can last for years. A much better approach is to plan your own estate, and consider it your final gift to your family.
Without a plan, the intestate statutes (intestate means to die without a will) of your state will have to decide who gets your property, according to how the State government has established your assets should pass on. When there is no plan, your assets are distributed through intestate probate, where the court will apply the intestate statutes and take fees in the process. Because intestate estate laws are complex and differ from state to state, your heirs should consult with an attorney to know what to do. Having no planning is more expensive and time consuming…so it is better to leave a mess, which is definitely cool.
Reason #2 Why Estate Planning is Cool
You Get to Decide Who Gets Your Assets.
You likely have assets. Assets can include bank or investment accounts — such as a 401(k) or rollover IRA — or property such as a house or business. Unless you want the government to decide who gets your assets, you have to decide who gets all of these things after you die, and you need to set up the plan ahead of time. There can be some uncomfortable questions, and emotionally difficult decisions to make, but it is better to choose these things before you die, rather than have your heirs sort things out.
Many times the default rules result in assets being distributed to people who you don’t want to get your assets. I had a client who just got divorced and left assets to her minor child. If the minor child passed away, the default rules would have given her assets to the ex-husband, which she did not want to do. Instead, we set up an alternative to the ex-husband inheriting anything, which worked out as she wanted. You can choose who you want to get your asset, too…another cool thing about planning.
Reason #3 Why Estate Planning is Cool
You Get to Decide Who DOES NOT GET Your Assets.
The flip side of the point above is that you can also choose who WILL NOT get your assets. Many parents want to leave things to their children equally, but some parents are estranged from their children and don’t want to leave them anything. Many states, including Colorado, have statutes that describe what needs to be done if a child is accidentally left out of a will, to give an accidentally omitted child the ability to inherit from parents.
Under the Colorado statutes, the law also assumes that a child not included in a will has been accidentally omitted, unless the estate plan specifically says that the omission was intentional. If you want to make sure someone does not get your assets, you definitely want to have an estate plan that makes that completely clear. The default rules will not be overly helpful if you rely on them, which is uncool. But, making your own choice of who cannot get their hands on your assets is cool.
Reason #4 Why Estate Planning is Cool
You Can Minimize Taxes.
At the risk of being too obvious:
Nobody likes paying taxes.
Once you decide who will get which assets, and who will not, you also have to consider tax implications. Different types of assets are treated differently for tax purposes. For example, real estate may be eligible for what is known as a stepped up basis, which can reduce or eliminate capital gains taxes on the real estate when it is sold.
Other assets – like stocks – can also receive similar favorable tax treatment at death, while some assets may have adverse tax consequences if not treated property. An IRA that is not set up to transfer properly can result in 50% or more of the asset being paid out to the IRS and State Tax Departments, like the Colorado Department of Revenue. Unless you love the IRS and want to give them 50% of your assets, you want to plan ahead.
Legally finding a way to reduce what you need to pay in taxes is definitely cool.
Reason #5 Why Estate Planning is Cool
Estate Planning is a Fluid Process, so You Can Change and Adapt.
Life circumstances change. A will that you put together 20 years ago probably won’t meet your goals today. If you’ve had children, gotten married or divorced, or had other major life changes, you need to think about whether your money and property will still go to the right people.
I have heard many stories (and personally witnessed a couple of times) when people passed everything they owned to an ex-spouse, parent instead of a spouse or children, or some other unintended recipient. They accidentally left nothing to their intended beneficiaries because they failed to update their plan.
Even if your life hasn’t changed, estate planning laws sometimes do. What might have been proper estate planning a couple of years ago may not be the best strategy today.
For example, the treatment of IRA and other qualified money has changed drastically over the last decade. I have read many trusts that are over a decade old that would result in the 50% tax to the IRS without an update. You don’t want to let an old, outdated plan let you and your family down, that would be uncool. Having an up to date plan is cool.
Reason #6 Why Estate Planning is Cool
You Can Plan Ahead Because the Need for an Estate Plan isn’t Immediate — Until it is.
You have your entire life to get your estate plan right, but you don’t know when your time is going to run out. I have had people meet with me, then die before they can sign the documents I draft for them. Fortunately this is not a common occurrence, but it does happen. You want to plan while you still can, and not leave this one to the last minute.
Once you die, you don’t get to tell us what happens to your assets, and we cannot ask you what you want, even if you come back as a ghost and try to tell us. Your heirs will find your wishes in your estate plan, but only if you make one before it is too late. Make sure it counts.
Everyone wants to know what the future is, and what it holds, so they can plan on what to expect when they get there. An estate plan makes that happen for your assets, which is cool.
Reason #7 Why Estate Planning is Cool
You Can Work With Michael Bailey, which I Have Been Told is Cool.
If you are reading this blog, and thinking that nothing about this article is cool, then the above statement is untrue. But, if you think that there might be some value in talking to a professional to get your estate plan set up, then you are in luck, because Michael, as cool as he is wants to meet with you personally.
You can set up an appointment now by clicking here.