I don’t have much of an “estate,” so why plan?

Posted By : admin
Category : Estate Planning
11 - Oct - 2013


I’m often confronted with this question from prospective clients who are struggling to understand why they should spend their hard-earned money to do “estate planning” when, in their own estimation, their net worth is quite modest.

Sure, it’s true that the Federal Estate Tax exclusion amount has been ratcheted up (currently, at least as of the date of this writing, October, 10, 2013, the first $5 million of your estate escapes the Fed. Estate Tax). It’s also true that Indiana has just recently repealed its Inheritance Tax. Based on these facts alone, the question remains, if your assets don’t exceed $5 million, why bother with estate planning?

Before I answer, it’s interesting to note that I never get this question from folks who have already gone through the estate administration process with a parent or loved one. Those folks already know the merits of well-planned estate succession. Either they’ve experienced the smooth transition and low cost of a well-planned estate administration, or they’ve endured the long (sometimes well over a year or more) and expensive slog through the administration of an estate that wasn’t well planned.

The answer to the “sixty-four thousand dollar question,” and what these experienced folks already know, is this: a sound estate plan can simplify the administration of your estate after your death to such a degree that it pays for itself many times over in the savings of attorney’s fees, administrative costs, time and hassle for your surviving family members. It’s really that simple.

This general rule is even more pertinent for those with modest estates. For those folks the costs of administering an estate without a cogent plan in place often amount to a greater overall percentage of the estate assets than those of wealthier folks. To illustrate by way of an obviously oversimplified example: it hurts the heirs of a $75,000 estate a lot more to spend $15,000 in attorney’s fees to administer the estate than it hurts the heirs of a $500,000.00 estate.

In addition to the obvious cost savings, sound estate planning helps to minimize the time and hassle involved in the asset transfer process. This is especially true if the plan adopted allows you to avoid the probate process altogether.

It is my goal to help clients create a plan and structure for their assets that makes their desired disposition of those assets happen as smoothly and inexpensively as possible. In many cases, through certain documents or techniques, we can reduce the back-end costs to next to nothing.

The bottom line: Yes, you are going to spend a little money now to plan correctly, but in doing so you can achieve exponential savings for your loved ones in not only money, but time and headaches as well.
Don’t let the memories of you that your loved ones take with them be tarnished by the great inconvenience and cost caused to them by your failure to take action when you had the opportunity.