By: Barry E. Haimo, Esq.
January 9, 2020
How Your Parents and Grandparents’ Lack of Planning Can Impact Your Family
You may have your will sorted out and up to date, but do your parents or grandparents have their estate plan in order?
Six out of ten Americans don’t have a will or an estate plan in place. And this lack of planning could seriously affect you, your family, and future generations. Even if they have created a will, it’s likely that they need to update it.
Talk to your family about their estate plan and urge them to move forward in the process to save you a headache later. Want to give them specifics about how you could be negatively affected? Read on.
Without an Estate Plan, You Will Be Caught in the Middle of Probate
If someone in the state of Florida dies without an estate plan, their estate has to be distributed by the state. That means beneficiaries have to wait for the state to value and distribute the entire estate based on the state’s rules regarding probate. This can take a very long time and result in an unfair distribution of assets after a person dies.
With a clear estate plan, the process is much smoother as all questions about the decedent’s estate are already answered. A personal representative, usually the child or spouse of the deceased, is in charge of distributing the estate based on the person’s last wishes.
With an estate plan, your parents and grandparents can strategically set up trusts and other strategies that easily transfer money and assets to you and your family based on your needs. Assets can go directly to beneficiaries or be held until the beneficiary reaches a certain age or specific conditions are met. The right estate planning strategies can even save money in taxes once the assets are distributed.
During the probate process, without court intervention, you won’t be able to set up specialized trusts, like a special needs trust or charitable trust. It may even be too late if the court grants the authority to create the trust for qualification purposes. Mistakes like this can be catestrophic.
Special Needs Trust Must Be Set Up By Parents or Grandparents
Here’s just one example of a trust that depends on the planning of a parent or grandparent. A special needs trust allows a parent to leave their disabled child money without affecting the child’s ability to receive Social Security benefits.
The trust is set up so that the disabled beneficiary is not in control of the money in the trust. Instead, the parent or grandparent must put a trustee in place to handle the money. Special needs trusts also require that the assets in the trust are only used to benefit the individual listed in the estate plan.
Without a special needs trust, a disabled heir may be able to receive an inheritance, but as mentioned above, their federal benefits could be compromised.
Remember, Every Estate Plan Looks Different
The special needs trust is just one example of a strategy that must be implemented through an estate plan. Talk to your parents and grandparents about their estate plan and the last time they updated their will. Small adjustments or adding trusts can make a big difference in what you receive after a parent or grandparent passes away.
Want to learn more? Get in touch with a Florida estate planning attorney.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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