People in Virginia may wonder, “Should I have an estate plan?” After all, thinking about one’s death is unpleasant, and some people may want to avoid making the tough decisions that must be made in the estate planning process. Moreover, when the Tax Cuts and Jobs Act of 2017 was passed, it increased the federal estate tax threshold two-fold to $11.8 million. As far as estate planning goes, this means that fewer people will be subject to the estate tax upon their death. Some people may think, then, that they do not need a will or trust, because the estate tax will not apply to them.
However, estate planning is still important. First, let’s talk about probate. If a person does not have a trust, after they die their property will go through probate. This is the legal process in which a person’s property is distributed to their heirs. If a person has no will and no trust, the state decides who will inherit their property, and it may not be to a person’s liking. Moreover, the probate process can be lengthy, costing both time and money that diminishes the size of the estate.
Through estate planning, a person can choose to execute many different types of trusts. This may be especially helpful if a beneficiary has special needs, is a minor, is too immature to handle a large windfall or there are other contingencies that might arise in a beneficiary’s life, such as divorce. The right trust can protect the beneficiary’s inheritance.
Estate planning can also be helpful if it is a person’s second or subsequent marriage. For example, if a person with children from a previous marriage passes away, the estate assets will still go to the surviving spouse, who could then, through a will or trust, deny the deceased’s children an inheritance, leaving them with nothing. Estate planning can prevent this from happening.
As this shows, there are still good reasons to execute an estate plan, even if a person will not be subject to the federal estate tax. Most people have a preference as to who should inherit their property. With a will or trust in place, a person can make these decisions to their liking, rather than leaving such decisions to the state or other unfavorable circumstances.
Source: Kiplinger, “Is Estate Planning Now Dead?,” Mirick O’Connell, May 1, 2018