A Parents Overview of Estate Planning

Estate planning is like life insurance or wearing a life vest on a boat, you hope it won't be used any time soon, but preparation is the smartest plan of action.

Estate planning is a process

• Protect your spouse and children from unnecessary stress, inefficiency, and expense;

• Distribute your property according to your wishes and values; and

• Provide for your children through a careful selection of guardians and the design of plans for the wise use of your assets.

Let's look at some estate planning facts.

Without Planning: Virginia will restrict use of your assets

• Even if you have no will, you have a will.  Your assets will go to your "heirs at law." If you only have children with your current spouse, all your separate property will go to him or her. This is probably what you want, however, there is no inheritance protection for your children in the event your surviving spouse remarries.

• If you have minor children from a previous marriage, 2/3 of your separate property must be put into a separate court-supervised trust for each of your children, restricting your spouse's ability to use the money.

• Separate trusts hurt the child with special needs due to an illness, accident, or other problem, because your spouse cannot use the other children's trusts to meet those needs, no matter how serious or urgent.

• 100% of the assets will be distributed outright, no later than when your child is 21, regardless of maturity level or financial experience.

Without Planning:  Virginia will decide who raises your children

• If the other parent does not survive the court will choose your child's guardian.

• If your family or friends disagree about who should raise your children, the court will have to step in, resulting in high legal costs and possible family rifts that never heal.

• Your children may even be placed in foster care until the dispute is resolved in favor of a court-appointed guardian.

Estate planning saves money

• Court, attorneys and trustees fees to administer court-supervised trusts for your kids, and to select a guardian

• Probate expenses of up to 5% or more of the asset values of your estate. This is based on your asset values without subtracting debt.

• Estate taxes of up to 47% of the current values of your assets (after subtracting debt) if your net worth plus life insurance benefits exceed $1,500,000.

Proper estate planning is a gift to your family

Between taxes and probate, your family may spend lots of time and money that could have been saved by a proper estate plan. It is so much easier on the survivors emotionally and financially if they can consult with a trusted attorney to administer your well-drafted plan. A few comfortable appointments and all will be set in accordance with your wishes.

Consider what you would prefer if you were the surviving spouse, and consider what your spouse would prefer if you were not there. Finally, imagine life for your children with guardians carefully chosen by you, and with the assets to ensure their comfort and security. This is the peace of mind that an estate plan can provide.

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