What Happens If You Don’t Have An Estate Plan When You Die Or Become Mentally Disabled?
Common Myths About Estate Planning
No one wants to think about dying or becoming mentally disabled. But preparing for these moments allows for your assets to be addressed the way you want, to whom you want and when you want. Proper planning can also avoid undue taxation, fees and court costs as well as time and pain for your family. Let’s discuss some common myths regarding estate planning:
Myth: Only the wealthy should have an estate plan. Your estate generally consists of anything you own that has value, such as bank and investment accounts, life insurance, retirement plans, personal property, real estate, business interests, etc. Planning for what you have worked hard to attain in life will pay off after you have passed.
Myth: If I have a will in place, I won’t have to go through probate. Probate is the legal process of determining ownership of your assets. Even if you have a will in place, if your total assets equal more than $100,000 or you own real estate, your estate will go through probate in Illinois and any other state where you own real estate. Probate proceedings can bring additional costs, delays of settlement and loss of privacy. A revocable living trust can help avoid the red tape of probate by privately distributing the property and assets to the trust which is managed by a trustee for your beneficiaries.
Myth: I’m young so I don’t need to bother with estate planning yet. Serious medical conditions can affect anyone at any age. Social Security Administration studies show that a 20-year-old worker has a 1-in-4 chance of becoming disabled before reaching full retirement age. Most Americans are financially better prepared to die than to become disabled, even though the chances are three to five times greater of a disability occurring. A living trust and durable power of attorney can avoid guardianship and protect your privacy during an unexpected incapacity. If you appoint yourself as trustee of your living trust, a backup trustee can step in and take over if necessary. Trust assets can also help alleviate any expenses incurred during this time. It is also prudent to make sure your disability insurance is in place.
Myth: My family can figure out the distribution of my assets after I die. Without a will in Illinois, the general rule is that half of your assets titled in your individual name will go to your spouse and the other half divided equally between your children. Today’s complex family structures may require intricate planning to avoid infighting. Without an estate plan, a typical probate estate could take a year to close, but many take much longer. The associated expenses of probate varies by state and the complexity of the estate, but fees can range from a couple thousand dollars to hundreds of thousands of dollars. A proper estate plan may allow your family to bypass the probate courts and save time, money and grief.
Myth: I can’t control what my family does with my assets once they inherit them. Estate planning not only gives you control of your assets while you are alive and mentally able, but also after you pass or become mentally disabled. You can set up your plan to protect children from divorce, bad spending habits, creditors, etc.
Myth: I already set up an estate plan years ago, so I don’t have to worry. Even if you have an estate plan in place, most plans need to be updated and reviewed for any life or law changes. Many laws have changed in the last few years, so it is important that your plan reflects these modifications to provide the most benefits to you and your family.
Our estate planning attorneys can help you avoid the headaches of probate, as well as provide solutions for smart asset structuring that offers the level of flexibility, control and privacy you need, whatever stage of life you are in. Call us at 847-382-9130 for a free consultation or visit us at www.kelleherbuckley.com for more information.