Do I need an estate plan if I do not have significant assets?
Creating an estate plan provides you with control over your assets after your death. Estate planning consists of arranging for the disposal of your assets after your death while minimizing tax consequences. Despite the importance of estate planning, less than half of all Americans have an estate plan in place. For those still on the fence about contacting an estate planning attorney, the following is a look at three reasons why you need an estate plan:
1. Control Over Your Assets
If you die without an estate plan, your assets will be distributed to your closest heirs in accordance with California law. California intestacy laws dictate that if the decedent is married, all community property will go to the spouse. Separate property will be divided in accordance to what other heirs exist. For example, if the couple had one child, half of the separate property will go to the spouse and the other half to the child. If the decedent is not married, then the children would take equal shares. Should the decedent have no children, then assets will go to the decedent’s parents.
Without a will, you are left with no control over who receives what assets. For individuals with complex family situations, such as step children, ex-spouses, or family feuds, dying without a will could result in family whom you do not desire receiving your assets. By setting out your final wishes, you will ensure that your assets go to those you love in the manner you desire.
2. Reducing Tax Implications
Various state and federal laws will impose estate taxes on estates that exceed annually set limits. Additionally, estates that go through probate will be forced to pay probate fees. An estate planning attorney can help you to pass down your assets without the need for probate or estate taxation. Your attorney may recommend the use of one or more trusts to accomplish this goal.
3. Protecting Your Assets
For aging Americans, it becomes crucial to protect your assets from spending down. In order to qualify for Medicaid nursing home coverage, you can have only a limited number of assets in your name. Excess assets could render you ineligible or require a spend down. Your estate planning attorney can help you to plan years in advance of retirement so that you can receive the nursing home care you may need later in life while preserving your hard earned assets.