Do I need an estate plan – if I won’t have estate taxes to pay?
There is quite a difference between estate TAXES and estate PLANS. A lot of folks think, “I’ll never have that much dough, so I don’t need to worry about that.” And there’s some truth to that.
See, the threshold where Federal estate taxes kick in (thanks to the new tax law), is at over $11 million per person. So, not *everyone* will need to worry about Federal estate taxes.
Here in New Jersey, it was the “State Estate Tax” which often tripped up folks. In New Jersey, state estate taxes used to kick in at assets over $675,000. And in the Garden State, it doesn’t take much to blow through that number. But in 2017, the threshold was raised to $2 million, and then the estate tax threshold was eliminated completely in 2018.
So, it’s pretty clear a lot of folks should not need to worry about estate taxes.
Does that mean you can skip out on creating an estate plan? Probably not.
Why do you need an estate plan?
Essentially, to avoid leaving a mess behind.
A mess that someone else will need to clean up.
According to a Gallup Poll in 2016, just 44% of Americans say they have a will that describes how they would like their money and estate handled after their death. ? In other words, 56% of your friends and neighbors do NOT have a will, and therefore will have no say in how their assets handled after they pass away (or will let their state dictate how their money should be distributed).
Broken down by age, 68% of those aged 65 and older have a will, compared with just 14% of those younger than age 30.?
So. Want to leave a few bucks to your favorite niece? Make a will.
Want to leave that 1979 Grand Wagoneer to your neighbor? Make a will.
Thinking about a gift to your old college after you pass away? Make a will.
What about leaving $5000 from your estate to your Church, or to your High School? You guessed it — make a will.
And, part of your estate plan should be setting up a durable power of attorney. That’s someone who can speak on your behalf and (if needed) make hospital (medical) decisions or financial decisions (and pay bills) when you are in the final stages.
Part of your estate plan should simply be outlining “who gets what” and also “what goes where.” Don’t leave it up to the state you reside in, to dictate how the assets get split up. Planning (and then carrying out) an estate plan is something YOU may do once or twice in your life. For goodness sake? “don’t wing it” or “do it yourself” to save a few bucks. Attorneys and financial planners go through this with clients all the time.
I’ve seen a lot of unhappiness, broken families, fights/disagreements among siblings lasting for years — over stupid stuff. Yes, it is truly stupid stuff.
Or worse, fighting over money. Is all that bitterness worth it?
Make a will. It’s the basic estate plan.
We plan on adding more information to this post, but the basic take-away at this point should be this: if you are one of the 56% in this country walking around without a will, what are you doing RIGHT NOW that is more important?
PS: I looked for a tasteful photo to add to a post about death, dying and planning an estate. Struck out. So, I snapped a photo of me as I wrote this (and Seaver) instead.