Estate Planning: What I Wish All Parents Knew Before Dying
As a concierge attorney, oftentimes I find myself sitting with my clients in their living rooms and at their kitchen tables listening to their problems, their concerns, and helping them navigate their goals. And believe me, I’ve heard it all.
Let’s face it; most people don’t want to talk about what happens when they die. I get it. Death and money are two awkward and uncomfortable topics.
But if you don’t plan, aren’t you’re actually causing your loved ones more discomfort upon your passing? Like it or not, death is an important part of life. Allow them to celebrate your life rather than worry about what they wish you handled before you died.
Nothing that my clients tell me is surprising. I’ve been told many times that my client refuses to go into a long-term care facility.
I’ve been told by a client that they won’t die…
I’ve also been told that my client refuses to give Uncle Sam any more of his money so his children can just ignore the tax laws.
These statements may make us laugh because we all know that one day our time will come and the government will get their cut. So why not take care of our estate plan beforehand so that our family doesn’t have to?
There are 3 popular misconceptions that I’d like to shed a light on.
The first and most standard comment I hear from clients is “I’m not a millionaire, so I don’t need an Estate Plan.”
Hearing this breaks my heart because we all work so hard for what we have and typically our goal is to pass on whatever we can to our children, right? I think it’s even more important for us non-millionaires to plan so that the court doesn’t end up deciding who gets what portion of our estate when we die. Or that the taxes and probate costs and fees aren’t higher than they have to be. We all want to save money.
This dovetails into the second misconception, “When I die, my spouse automatically receives all of my stuff.”
Again, it’s not this simple. If you pass away without the proper documentation, Pennsylvania law may split your assets between your spouse and your children or even your parents and siblings. But what if you don’t want your spouse to lose out? I had a client who didn’t understand this concept and when she passed away, rather than her husband getting her money, we had to split it between him and their children. And the sad part was that she didn’t have a relationship with one of her children. And now her husband struggles and lives month to month because that money didn’t all end up with him.
And lastly, misconception three, “I’ve paid tax all my life – my kids don’t have to pay tax when I die.”
Unfortunately, this isn’t the case. A child will pay Pennsylvania inheritance tax, possibly income tax and worse, even capital gains or federal estate tax given the makeup of your estate. The only tax free transfer is life insurance. Even if jointly owned, tax is still assessed.
I understand that this is a big deal and may not be something you want to think about but do yourself and your family a favor and let’s get this done together by the end of the year. That way you can start the year fresh, without any worry.
Remember, you want your family to celebrate your life rather than worry about what they wish you handled before you died, so for them….get the information you need to plan your estate properly.