We can all agree on the simple fact that no one enjoys probate. The process is long, complicated and expensive, but that’s precisely where family members will end up when you pass away without enacting a formal estate plan. Many of us, however, prefer to avoid considering a time when we may become unhealthy, unaware, or no longer living.
To help overcome that internal inertia and take steps to protect your loved ones and save them money, here are four points to understand about estate planning today.
Investing In An Estate Plan Saves Money
While the cost associated with an estate plan may not feel like it produces much of a tangible benefit now, just like car insurance, it pays off when you need it. The cost of having a will written is far less than it costs an attorney to petition the court to sell a house in probate. If you have enough probate-able assets to trigger full probate in Arkansas (more than $100,000 by value excluding your homestead) then the cost to have a trust implemented will in almost every case cost less than probate. And while the probate process can resolve many of the same issues (with time, stress and no shortage of expense), many relatives are eventually distressed to learn they could have been saved that trouble with a small investment ahead of time.
Planning Now Protects Your Privacy
Most of us value our privacy, particularly when it comes to family finances. A thorough estate plan preserves that privacy in contrast to probate, where every court-filed document becomes publicly available to anyone who may like to see it. In addition to minimizing unnecessary expenses for your loved ones, the estate planning process also keeps your family affairs confidential.
Realize Tax Benefits Later with a Plan Now
In addition to saving your heirs thousands of dollars in probate, an estate plan offers income tax benefits while also minimizing estate tax risks. On the income tax side, an estate plan can assure a tax basis step-up, after your death, for your spouse, on their own assets (as well as yours), which can be a profound benefit to your spouse during the remainder of their lifetime. Current law will also reduce the estate tax exemption beginning in 2026, returning it to the $6 million to $7 million range. Sound like a lot? Just remember that the definition of “estate” covers everything you own or exercise a certain amount of control over, including life insurance payouts. With the estate tax rate of 40%, having a plan in place can yield significant savings.
You Can Make a Plan at Your Own Pace
Not ready to commit to a final estate plan? Even though most plans can be changed the next day if you prefer, getting a draft in place is as simple as calling an estate planning attorney and telling them who you want your property to go to. That way, if you decide to take a trip abroad or get admitted to the hospital unexpectedly, the hard work has already been done. Even if there are parts of the plan you haven’t fully decided on, getting the elements on which you have decided put down on paper is a time saver.
Realizing that hindsight is 20/20, take that first step now to overcome inertia or misconceptions about estate planning. You can save your loved ones time, money and anxiety, as well as protecting the privacy they might risk during the lengthy process that is necessary when a solid estate plan is missing.