Estate Planning, what I sometimes call inheritance planning presents several challenges.
Though this may sound self serving, the first challenge is to find the right attorney. Some people are intimidated by attorneys. They are concerned that they won't choose the right attorney for the job, or not choose the best one. Some fear that the attorney will take control of the assets away from them. Or that they can't afford one. As a result much of the planning that needs to be done is never started.
The attorney though is an essential part of your estate planning team. He or she plays an integral part in helping point out the problem areas and then prepares a plan to reduce or eliminate these potential snags.
The second challenge is probate. Probate is the court proceeding that concludes all the financial matters of the person who has died. The probate court makes sure that the person's debts get paid out of the estate's available assets. If there is a will, the court reviews it and rules on its validity. Finally, it changes the title of all assets from the name of the deceased to the names of the beneficiaries listed in the will.
Of course, all the court's "help" comes at a price. Attorney fees, appraisal fees, personal representative fees, and court costs all add up to take a bite out of the estate. Depending on the state, the probate and administrative fees can eat up five to ten percent of the gross estate.
Not only is probate costly in money, but it is also costly in the amount of time it takes to complete the process. The average probate can take from nine months to two years. During that time your heirs will have to wait to receive their complete inheritance until, at last, the probate is concluded.
While we all like to think of our affiars as being a private matter, the probate process airs all our laundry for anyone to see. Probate is a public process. This means that anyone who chooses, can go to the courthouse and see exactly how much you had and who you left it to. Many salesmen use the probate files to obtain leads. Kind of twisted don't you think?
The final estate challenge is estate taxes. The tax man cometh. Even in death the long arm of the government, both state and federal want a piece of what you have accumulated. On large estates the government will take as much as 60 percent of the estate!