According to a survey conducted earlier in 2019, only 40% of American adults have a Will or Trust. That percentage drops dramatically for younger age groups. For example, only 19% of people ages 18-34 have a Will or Trust.
So what’s the big deal?
As Baby Boomers pass away, experts predict that over $68 trillion (with a ‘trill’) in wealth will be transferred over the next 25 years. And the estate planning of those Boomers will control where all that wealth goes.
Despite the hugeness of those numbers and the importance of estate planning, it is easy to procrastinate when it comes to actually setting your affairs in order. Here are the top 7 reasons (in no particular order) people give us to explain why they delay estate planning:
First of all, you are never too young to have an estate plan. I wrote a series of articles specifically geared toward estate planning for Millennials. (Or you can substitute “Millennials” for “Gen Z” or whatever weird thing we are on now.)
Whenever young people say “I don’t have enough assets for an estate plan” or “I’m going to wait until I have a family,” what they are really saying is, “I don’t plan on going anywhere anytime soon.” Because young people don’t die, they live forever.
The Internal Revenue Service (IRS) recently announced that the estate and gift tax exemption is increasing in 2024 to $13.61 million per person, up from $12.92 million in 2023.
The IRS also confirmed that the annual gift exclusion amount is increasing from $17,000 per person in 2023 to $18,000 per person in 2024.
Read more: IRS Rev. Proc. 2023-34
Okay great, you might be saying to yourself. But what does that mean, and why does it matter?
Great questions.
There are a lot of misconceptions about estate taxes and gift taxes — often referred to as “death taxes.” What they are, who has to pay them, how to avoid them.
This article is my attempt to demystify the topic for you and to help you figure out how these tax changes could affect your estate plan.
2023 is almost over.
The end of the year is a time for people to gather together with family and friends, to look back on the past 365 days, and to look forward to better, happier things.
People usually don’t want to think about things like—oh, I don’t know—their mortality. Death. Stuff like that.
However, it is crucial to regularly review and, if needed, update your estate plan. The end of the year is the perfect time to do that.
So before you completely wipe 2023 from your memory, ask yourself these 8 questions to make sure your estate plan is ready for whatever 2024 throws at you.
First, make sure your will or trust correctly states who will inherit your assets.
You should then review your pay-on-death (POD) beneficiaries on insurance policies, retirement accounts, and other assets.
Do they match the beneficiaries in your will or trust?
Related post: 7 Mistakes to Avoid When Naming Beneficiaries
Many people incorrectly believe that a legal document such as a will or a trust controls what happens to all of their assets.
However, beneficiary designations can override those documents.
For example: Your trust may say that your son John will receive your entire estate and that you are disinheriting your other son, David.
But if your insurance policy lists David as beneficiary, he will still get part of your estate.
You should therefore coordinate your beneficiary designations with your will or trust to make sure all of your assets are distributed the way you want.
Lawyers love to be confusing.
We use insane-sounding words from Latin and Greek and some other languages that I’m pretty sure are completely made up.
Words such as testator, force majeure, per stirpes, and inter vivos.
Our words are so weird, we have to italicize them.
So I’m not surprised when someone asks me whether a Last Will and Testament and a Living Will are the same thing.
After all, both documents have “Will” in their names, right? It would only be reasonable to think that they are similar.
But they are not similar. They are very, very different.
So I’m going to cut through the legal jargon and explain the differences between Wills and Living Wills — and help you decide which one might be best for you.
Before diving into specifics, it’s first helpful to know how to define estate planning:
An estate plan ensures (1) that the right people are able to care for your SELF in the event you become incapacitated and (2) that the right people are able to get your STUFF in the event of your death.
Every estate planning tool fits into one of those two categories, and a good estate plan should address both areas of focus.
And as luck would have it, I will be discussing both categories in this post.
So you’ve got some nifty estate planning documents?
You are awesome.
Formal estate planning document can ensure your family is cared for after your death, avoid court, and minimize the burden your loved ones will face when you are gone.
But legal documents are only one part of the equation.
Your estate plan is not complete just because you signed some fancy papers.
Because while formal estate planning documents can avoid legal obstacles after your death, they do not eliminate the myriad other tasks necessary to settle your affairs.
Think of it this way:
If you died today, would your family know what to do?
If they couldn’t remember anything you told them about your estate, would they be able to easily find all the information they need?
Read more: Why You Need to Have an Estate Planning Fire Drill
If you answered “no” to either of those questions, then your estate plan is not complete.
To make things easier on your loved ones after your death, the best thing you can do is create an estate planning letter of instruction.
As an entrepreneur, your life is often consumed by your business. But have you stopped to consider what would happen to your business if you are injured?
If you come down with an illness?
If you suddenly die?
Entrepreneurs who fail to create an estate plan leave their life’s work at risk of being torn apart or lost entirely after they are gone. To keep that from happening, here are a few estate planning documents every entrepreneur should consider:
You finally took the plunge and created an estate plan. Wonderful. Awesome. High five. But now that you have a plan, how often do you need to revisit or update it?
Rather than updating your estate plan every X number of years, we recommend revisiting and (potentially) revising it whenever you experience a significant life change. A will or trust you signed years ago might no longer reflect what you care about.
Consider reviewing and/or updating your estate plan if you have experienced any of these changes:
Elder fraud and financial exploitation has become an epidemic.
More than ever before, con artists and family members alike are taking advantage of their elderly relatives, friends, or neighbors.
Could your parents or grandparents be next?
The best defense against elder fraud is having caring friends or family with the senior's best interests at heart. But those friends and family can only prevent elder fraud if they know how to spot it — and that's what this blog post will teach you.
This post will cover five ways you can help keep your loved ones safe from elder fraud and financial exploitation. Specifically, you can:
Talk with them about their finances.
Ask them about suspicious phone calls or interactions.
Keep abreast of changes to their estate plan.
Inquire about about caretakers, helpers, or sudden "best friends."
Investigate abrupt or unexplained transfers of assets.
But before we dive in to prevention, let's cover some of the basics of elder fraud.
Do you want to pay less in taxes?
Of course you do. I would be worried if you wanted to pay more in taxes...
The question is HOW you can pay less in taxes. Here's one way: estate planning.
A good estate plan can help you minimize your tax burden. Specifically, estate planning can impact (1) income taxes, (2) inheritance taxes, and (3) estate taxes.
Most people are familiar with income taxes. However, they are less familiar with estate taxes; and many people have no idea that inheritance taxes even exist. So it comes as no surprise that one of the most common questions I get from prospective clients is:
"Do I need to pay inheritance taxes?"
It is a good question and is usually accompanied by a number of other, related questions:
What, exactly, is an inheritance tax?
Is an inheritance tax the same thing as an estate tax?
How can I avoid having to pay an inheritance tax?
This blog post will answer these questions, give you a better understanding of the difference between inheritance taxes and estate taxes, and explain how those laws operate in Oklahoma.
Here's a scary question:
Does your estate plan actually protect your estate?
You spent all that time and money to make sure that your estate will be protected from taxes, from probate, and from creditors — but you may have forgotten one major thing:
You forgot to protect your estate from your heirs.
The sad truth is that children and other heirs often fight over the estate of a deceased loved one, even if the decedent left a valid estate plan. And fighting often means lawsuits.
Heirs can contest an estate plan for a number of reasons: jealousy, greed, sibling rivalries or disagreements. Regardless of why a lawsuit is filed, it means trouble for everyone involved.
