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Everyone should have an estate plan
to pass more on to your beneficiaries and avoid the oftentimes
unjust consequences of the probate system. For example:
- Elvis Presley left a $10.2 million
estate. However, his probate court costs were $7.2 million
leaving only 28% of his estate for his heirs.
- Marilyn Monroe, who left an estate over $1 million, which took 18 years to probate, leaving
just $101,000 for her heirs after lawyers and others
took their fees.
- J. Paul Getty’s estate has
paid over $40 million in probate costs to lawyers and
others.
- Penny pincher John D. Rockefeller’s
probate expenses cost 64% of his huge estate.
We know this because probate proceedings
are generally public records whereas trust agreements are
generally private records. Generally, for the years 2007
and 2008, estates will be taxed at 45% for every dollar
over $2,000,000. An estate plan allows you to maximize
your estate tax exclusion, allowing up to $4,000,000 passing
to your heirs without an estate tax.
Even if you fit into the vast majority of people that do
not have the assets to trigger the estate tax as it is now,
an estate plan is still important. Beginning January 1, 2011,
the estate tax exemption will be approximately $1,000,000.
Your estate may be susceptible to an estate tax just by owing
real property or a large life insurance policy.
Further more, an estate plan helps avoid the costly probate
process. Property owned by the “estate” and must
remain so until the probate process is complete and the judge
says it may be distributed. Recently the AARP did a national
survey and found that the average probate costs were between
2 and 10 percent of the decedent’s estate. Probate
is a process whereby your heirs have to “prove the
will” or marshal assets and distribute them to those
who are entitled to inherit them while being reviewed or
monitored by a judge or other court appointed person. Generally,
in probate, the process has three processes:
- Discover what
personal property and real
estate is owned by the deceased
person;
- Pay an tax or debts that the deceased
person may owe; and
- Distribute all real and personal
property that remains to the rightful beneficiaries
A
proper estate plan can minimize or even eliminate
probate costs, attorneys’ fees and court costs. Furthermore,
an estate plan gives you better control over
the distribution of your estate and total flexibility
to
change or revoke
the trust. Additionally, an estate plan is
settled almost immediately whereas in California,
the minimum
time an estate will be open is probably six months to a year.
It can be significantly longer if the estate requires
real property
such as a home to be sold and the buyer to
close escrow. If someone challenges the will or paternity,
the probate
process can take years to complete.
An estate plan should also eliminate any conservatorship
proceedings during your life. Thus, if you become
incapacitated and your spouse needs to sell real
property, he or she
will not need to institute and complete a conservatorship
proceeding
before he or she can sign for the incapacitated
spouse.
If you or someone close to you has recently married
or divorced, recently acquired wealth, became
new parents,
bought a new
home in their names and not the name of a trust,
or are retirees without an estate plan, you can
talk to an attorney
at McCullogh & Associates
and get a free consultation.
NOTICE:
McCullogh & Associates has provided the
contents of this page for general informational
purposes only. You should not substitute this
information for personal consultation with
a qualified professional in the field, nor
should you rely upon this information in taking
any action. No attorney-client relationship
will be created through your use of this letter
or its web site.
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