In your field of endeavor, you are an expert, so you know things about it that a layperson would have no reason to understand. They have never looked into the subject as deeply as you have as a professional, and this is true for all areas of expertise.
Unfortunately, a lot of people do not apply this simple reality to the subject estate planning. They assume that you draw up a will when you plan your estate and there is nothing more that you need to know. In reality, this is a gross oversimplification.
There are many different ways to plan your estate, and there are considerations that are often overlooked. With this in mind, we will share three little-known facts about this important process in this post.
Intestacy Can Be Devastating
According to a Caring.com survey that was released at the beginning of 2021, just 32.9 percent of American adults had wills or trusts in place. Only 44 percent of respondents that were 55 years of age and older had estate plans.
Intestacy is the condition of dying without a will, and about half of the people in the United States do in fact die intestate. A lot of them assume that it is no big deal because the state will take care of everything, and the assets would get into the right hands.
The state does have a mechanism to address intestate estates, so there is a shred of truth in that assumption. When someone dies intestate, the probate court will preside over the case, and they will appoint a personal representative to administer the estate.
In a perfect world, the family of someone that dies intestate will be on the same page in every way, but we do not live in cookie-cutter society. There are many blended families, and there are people that have gone through bitter divorces after having children with their former spouses.
Siblings sometimes have problems with one another, so there can be competition between two siblings that want to act as the personal representative. When there is no will, anyone can claim anything with regard to the true intentions of the decedent.
Ultimately, the court is required to order the administration of the property under the intestate succession laws of the state of California. When it comes down to this, the way that the assets are distributed may not be consistent with the actual wishes of the deceased individual.
Even if there are no severe complications, probate is complicated and time-consuming. All of the drawbacks and potential nightmarish scenarios can be prevented in advance if you work with an attorney to put a plan in place.
You Can Include a Pet in Your Estate Plan
After you reach the age of 60 or 65, you may take pause before you bring a puppy or kitten into your home because of longevity concerns. This is a responsible viewpoint on the one hand, but many seniors experience loneliness, and a pet can be the ideal solution.
You may not be aware of the fact that you can create a pet trust for the benefit of your fine furry friend. The caretaker that you name in the document would receive distributions from the trustee that would be used to serve the best interests of the dog or cat.
If there is anything left in the trust after the death of the pet, it would be inherited by a successor that you designate in the trust declaration.
Inheritances Are Not Subject to Income Taxes
Income from any source must typically be recorded when you file your federal income tax returns. This can lead to the belief that an inheritance is also a form of taxable income, but for the most part, this is not the case.
Property that was in your possession at the time of your death was accumulated after you paid taxes on your income, so another tax on the property transfer would be an instance of double taxation.
However, transfers of untaxed assets would be subject to taxation. This would apply to the untaxed earnings that are generated by a trust. There is also the matter of inherited traditional IRAs. They are funded with pretax earnings, so distributions to a beneficiary would be taxable.
We Are Here to Help!
Today is the day for action if you are going through life without an estate plan that has been carefully designed to suit your specific needs. Personalized attention is the key to a properly constructed plan, and this is what you will receive when you choose our firm.
If you are ready to get started, you can schedule a consultation at our office if you call us at 818-937-2335. There is also a contact form on this site you can fill out if you would prefer to send us a message.