Los Angeles attorneys will answer “no” to this question, but there are good reasons. The focus of estate planning seems to have narrowed to tax avoidance, which legal experts admit is a vital part of any estate plan. Many individuals forget that complete plans go well beyond keeping assets from the IRS.
The American Taxpayer Relief Act of 2012 was an anxiety reliever for many Californians. The law continued generous estate tax and gift exemptions. The $5.25 million individual threshold for tax-free gift giving or asset transfers eliminated tax worries for many wealthy people.
A portability feature also allows a decedent to pass an unused gift or tax exemption onto a surviving spouse. With most of the tax bases covered, are estate plans still worth the investment?
Yes, and here’s why. Did you create your wealth so someone else could decide how it will be divided?
Without a will, probate takes the reins of asset distribution because a decedent’s preferences are not clarified. Laws of descent and distribution are applied. The court dictates who gets what and how much.
What if the judge decides a family member will receive your property, but the relative is unprepared to handle it? An estate plan can include a trust to direct the flow and management of assets under a trustee.
Death is not the starting point for most estate plans. Many people become incapacitated before they die. A durable power of attorney allows an individual to hand pick a money manager to take his place during life in the event of incapacity. An advanced health care directive similarly allows individuals to make medical decisions before age, accident or illness intervenes.
Estate tax and gift benefits are tremendous, but they aren’t everything necessary to an estate plan. Estate planning suddenly regains importance when people realize strangers could be making decisions about the assets they’ve worked so hard to accumulate.
Source: clarionledger.com, “Advice: Estate planning still has its place,” Tyler Ball, April 6, 2013