Is a Basic Estate Plan Enough?
Are you in the process of estate planning? If so, you will find yourself faced with the question of
whether or not a basic estate plan is enough for your estate. If you only have one or two
beneficiaries and if you have very little property to bequeath, a basic plan may be best for you.
For those with more complex assets and families advanced planning is better. There are three
disadvantages to settling for a basic plan when your estate requires more.
Cannot Reduce Estate Taxes
If you pass away in 2010, your family will not owe federal taxes on your estate. This is because
the 2009 exemption level of $3.5 million was not renewed by Congress, at least not as of this
point, fall 2010. Therefore, current law provides that in 2011 all estates worth more than $1
million dollars will be subject to estate tax. Don’t forget the full death benefit amount on your
life insurance is includible in your taxable estate, even if it gets paid to a beneficiary! This lower
exemption threshold is a great reason to have an advanced estate plan if your holdings are near
or worth more than the expected exemption level.
A basic plan, namely a Last Will and Testament, cannot provide a way to reduce estate taxes.
Your family could be hit with a very large tax bill if you pass away with a basic plan and a high
net worth. You can create tax planning within a Last Will but it requires two probates to make it
work. That is not appealing, or smart.
Cannot Leave Special Inheritances
If you have minor children, a family member with special needs, a pet, a loved one who is bad
with finances or a blended family, you may need a plan that allows you to create special
inheritances. A basic plan does not.
In a Last Will and Testament, unless there are trusts created within them – testamentary trusts,
overseen by the court system - inheritances are left directly to the beneficiary. If your loved one
is underage, property or funds will be held by a guardian. For special needs family members a
direct inheritance may reduce or eliminate their government aid. For blended families, items
you leave to your spouse may not necessarily pass to your children later. With an advanced
plan, special trusts provide flexibility to help you provide your loved ones with a steady income
and inheritance protection.
Cannot Protect Assets
Basic planning does not offer any form of asset protection for your or your family. This means
assets can be taken at any time to settle a debt or lawsuit. With advanced planning, Irrevocable
Trusts and Limited Liability Companies offer you and your family
proper asset protection.
Experienced estate planning attorneys Oklahoma City OK of the Parman and Easterday offers
estate planning and business planning resources to residents of Oklahoma City OK. To learn
more about these free resources, please visit http://www.parmanlaw.com/. today