The Answer is Probably: Yes
Your divorce has just been finalized (FINALLY!). You think that you are done with lawyers and paperwork for the time being, right? Probably not. Now is when you should be setting up your Estate Plan, or reviewing the Estate Plan you already have in place.
Most people are happy to avoid addressing issues relating to their own mortality, and while the idea of more legal work may seem daunting after finally completing your journey through Family Court, the reality is that if you don’t address your Estate Plan as part of this life event, there is a high probability that you may wait until it is too late.
A quality Estate Plan provides you with many benefits, which include:
Probate Avoidance: Probate is the Court process through which a person’s assets pass to their heirs, whether via a Will or “Intestate Succession” (when someone dies without a will). Attorney fees for Probate cases are set by statute and are based on the gross value of the estate. For example, a $1,000,000.00 estate will have a base statutory attorney fee award of $23,000.00, and this assumes no “extraordinary fees” are warranted. The executor or administrator of the estate is entitled to the same fee, so a $1,000,000.00 estate will cost a minimum of $46,000.00 in probate fees alone, plus costs. A well prepared, and properly funded, Revocable Living Trust will allow your estate to be transferred to your heirs without incurring Probate fees. Probate fees are calculated on the gross value of the estate assets, with no offset for debts (including the mortgage on your house). With home values being so high these days, anyone who owns a home should establish a Revocable Living Trust as an essential part their Estate Plan.
Minor Children: Even someone who does not have an estate which would benefit from the probate avoidance benefits of a trust might still consider creating one in order to appoint a trustee to manage any assets left to minor children. If left to the Probate Court’s discretion, the minor child’s living parent is a logical person to be tasked with holding, managing, or distributing the assets left for minor child(ren). Most people find the thought of the person they just divorced being in charge of the inheritance they are leaving for their child to be distasteful. Even if the funds are held in a blocked account until the child reaches majority, another likely outcome, those funds will be distributed, in their entirety, to the child upon their reaching age 18. A Trust allows you to designate the person who is in charge of distributing the funds on behalf of the minor child. This means that your ex-spouse would need to get the approval of your chosen trustee if funds are to be distributed. It also allows you to dictate a distribution of the funds at a future point after the child turns 18, or to distribute it in stages during the child’s early adulthood.
Incapacity Planning: A good Estate Plan will include not only the Trust and Pourover Will, but will also include a Durable Power of Attorney and a Power of Attorney for Healthcare Decisions (or Advance Healthcare Directive). This will allow you to designate someone, typically the same person appointed as Successor Trustee of the Trust, to make these decision on your behalf should you be unable to do so. Without this, if you become incapacitated, your family will be faced with the prospect of initiating a Conservatorship proceeding in Probate Court to obtain the same decision making authority that can be granted by simply executing these documents while you have capacity to do so.
This information and more can be found on our website: www.delponteandhirz.com. If you would like a free consultation with one of our attorneys to discuss your Estate Planning needs, please call us at 408-294-4525.
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