How can I preserve my assets for my kids and loved ones?

With tax time well behind us, you may be thinking you did well by minimizing what you paid to Uncle Sam and your state in taxes, so more can go to your family.  Every year around tax-time, we’re reminded of how complicated maximizing your money and minimizing tax liabilities can be - and for many people, this seems to be the singular focus for how to preserve assets for loved ones.

Unfortunately, we don’t get much in the way of real information about really preserving our assets through estate planning.  And, regrettably, many of us simply don't think about it, or maybe think we don't have enough to make a difference.

Simply put, this is Penny Wise and Pound Foolish - Your family will likely lose more in the costs of estate administration than you can ever overcome with annual tax tricks. 

Truth is, if you have people you love and any assets at all in your name, you do have an estate and it is worth preserving for the people you love. In some cases, that may mean keeping them out of court and out of conflict, if anything happens to you. (Did you know that the biggest family fights happen over the smallest sums of money or even the personal effects of a person who has passed on? Let’s keep that from happening to your family!)  

If you’re concerned about maximizing the amount your heirs receive and minimizing the amount received by governments, there are several steps you can take.

First and foremost, keep your family out of Court. It’s unnecessary, extremely expensive and almost always public. Consider using a Trust to make it easy to handle your assets if you become incapacitated or when you pass on. 

Second, ensure legal documents are in place for trusted family or loved ones to take care of financial, legal and health care issues in the event of any incapacity.  An incapacity without simple legal planning in place can be devastating to a family, both financially and emotionally. 

Third, while most Americans need not worry about the Federal estate and gift tax ($5.49 million in 2017), if you have an estate near or above that level ($10.9 million for married couples) you need to implement tax minimization strategies to avoid the extreme estate tax hit your heirs will experience. Some will need to think about State taxes, as well, if you live in one of the 20 states that impose them. (Wisconsin does not.) 

If you’d like to ensure that you maximize the resources available to your loved ones and keep your family out of Court and out of conflict, schedule a Family Life and Legacy Planning Session.™ We can review your existing plan and help you make adjustments that will help you achieve your goals. 

This article is a service of The Estate Planning Group and Davidson Law Office, LLP, your Life & Legacy Planning Lawyers, who believe in developing trusting relationships with families for life. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.

What Is Probate? Will My Family Need To Go Through Probate Court?

     There is a lot of misunderstanding on just what probate is, and when an estate goes through the Probate court.  Many believe that if they have a Will, their family will not have to go through the Probate process - not true.  If you have no Will, your estate goes through Probate and if you have a Will, your estate goes through Probate ...  unless you have done specific probate avoidance planning, such as put in place a fully funded family revocable trust.

     So, let's look at what probate is: Probate is the formal process of transferring your estate assets to your creditors, and the beneficiaries as designated by law, or within provisions set forth in your will, if you had prepared one. It is court-supervised, requiring validation and accounting of all claims by creditors against your assets at your death, as well as requiring an accounting of all remaining assets, and approval of the distribution of such assets. At the beginning of a probate administration, a petition is filed with the court, usually by the personal representative named in your will. After notice is given, and a hearing is held, your will is admitted to probate and a personal representative is appointed. If you die without a will (“intestate”), your estate is subject to the same probate court administration, only the personal representative, or administrator of the estate, is appointed by the court, and the distribution is carried out strictly as the law prescribes.

     If your total estate assets at the time of death do not exceed $50,000, the beneficiaries of your estate may file for an “informal probate,” which is a simplified procedure to settle the estate without all of the formalities required in the standard probate administration.

     The probate process has some advantages. In highly contentious situations, though the costs to the estate will be relatively high, the probate court strictly applies the rules set forth in the law to resolve disputes regarding asset distribution, with oversight and final accounting approved by the court to ensure proper application of the law.

    Disadvantages of probate include its public nature; your estate plan and the value of your assets become a public record. Additionally the time to settle the estate, the formalities imposed upon the family, and the expenses to complete the process, can be significant. The average probate in Wisconsin takes approximately 18 months to complete and consumes approximately 6% to 10% of the estate value - for example in a $200,000.00 estate, one can expect $12,000 - $20,000.00 in costs that won't go to the heirs or beneficiaries.  The advantages and disadvantages of a probate proceeding should be discussed thoroughly with your estate planning lawyer.

   The Estate Planning Group / Davidson Law Office – Wisconsin estate planning attorneys provide Life & Legacy planning helping Wisconsin’s families plan for an uncertain future so they can stop worrying and start living.  Call us if you’d like our family of professionals to help you ensure your family and your legacy are protected no matter what happens.