Last updated on July 23rd, 2024
Some sources say anyone with assets needs an estate plan, while others indicate it only delivers value to the wealthy. The truth is it’s not that simple and depends on each individual’s unique situation, as well as tax laws and legal processes in the state where you reside.
To start the discussion, it’s important to clarify the difference between a will and an estate plan. A will defines how certain financial affairs will be handled upon your death. An estate plan defines how your financial affairs, healthcare decisions, and legal concerns will be handled while you are alive and after your passing. Put simply: a will is one part of an estate plan.
While net worth is one factor that prompts the need for an estate plan, there are others like whether you have a business; a succession plan; a family; a blended family; young children; a dependent with special needs; others dependent on you for care and/or support (i.e., parents or siblings); a health condition that may require long-term nursing or in-home care (or you want protection just in case); concerns about family infighting or external challenges to your will; concerns about an heir’s ability to manage money; philanthropic goals; and more.
In essence, a comprehensive estate plan can help you understand the risks and opportunities related to your unique situation and plan accordingly. The goal is to help ensure your wishes – in life and upon death – are carried out so the people and causes you care about are taken care of in the manner you desire, and tax exposure is minimized.
Consider it an investment in your peace of mind. Documentation and guidance will be in place so, when the time comes, those who will be taking care of your affairs will have a clear roadmap to carry out your wishes.
So, what does estate planning entail? At RBT CPAs, our Trust, Estate & Gift professionals take the time to learn your goals and wishes based on your unique situation. We help you understand your options and their implications. We can point you to legal resources to draw up required documents and we review those documents to ensure they accurately reflect and align with your wishes while keeping an eye on the tax consequences.
It can take several months to complete an estate plan, execute related documents, and complete corresponding actions. The time and resources you invest in a plan now can save time, money, and distress later.
If you do not have a will, state laws dictate what happens to your assets. Even if you have a will, upon your passing, your estate will go through probate – a legal process for settling an estate – prior to assets being distributed to beneficiaries.
Probate usually takes anywhere from 1 to 2 years to file the initial petition, gather assets, pay taxes and debts, pay administrative costs, finalize matters with the court, and distribute the estate balance. Contentious estates may take considerably longer to settle. With certain estate planning moves, probate may be avoided altogether.
Once you have an estate plan, it’s a good idea to review it annually to ensure it reflects any changes in your situation and tax laws. (If you decide a will alone will suffice for your situation, we still encourage you to review it annually.)
To learn more about RBT CPAs estate planning services or to schedule a consultation, email irahilly@rbtcpas.com or call 845-567-9000 and ask for Ita. You’ll see why you and RBT CPAs can be Remarkably Better Together. RBT CPAs is also available to handle your accounting, tax, audit, and business advisory needs. Give us a call today.
RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.