Well, it’s here again. Tax season is inevitable, as the old saying goes, and this article will give a brief primer on the top ten things you should know about tax season, including why filing is important, how life changes can affect your taxes, and, of course, penalties you can incur if you run afoul of the IRS.
Top Ten Tax Things to Know
Coming in at number ten (though it could fall anywhere on this list) is e-filing. E-filing is a good way to save money, as opposed to doing your taxes on paper and mailing them in via snail mail. You can use tax software (like that at H&R Block, for example) to help you save time, trees, and, most importantly, money.
9. Always Look for Exemptions
Being married and having kids are two major examples of exemptions. Chances are, even if you don’t fit into either category, you might fall into an exemption that will save you money. For example, if you fall into a lower tax bracket, you might be eligible to save on your taxes. Taking your time to find out whether you can save is a wise idea.
8. Three Words: Adjusted Gross Income
That’s what really matters. Your AGI (Adjusted Gross Income) is the number you get after the government subtracts expenses, like IRA contributions or education tuition. AGI determines credits and deductions we can take. After deducting those, we get our taxable income. The word “AGI” is all over your tax forms because it is really important at the end.
7. Credits = Money Saved
Exemptions and credits are not the same thing, even though they’re both good. An exemption reduces your taxable income. Credits actually reduce how much taxes you owe. Credits are simple to understand: a credit is money you don’t have to hand over to the government.
6. Standard Deduction
Standard and itemized deductions are always somewhat of a source of confusion for people. Here are brief definitions for both. First, a standard deduction is worth somewhere between $5,800 and $11,600. If you have simple taxes, you don’t have to go through a huge process to get deductions. A standard deduction is just a reduction off your taxable income. It’s a flat number. You take it, and you pay less.
5. Itemized Deduction
…Which then brings us to itemized deductions. For itemized deductions, you will need to list out each deduction you can take. If your itemized deductions together equal more than your standard deduction, this is the deduction you take. Examples of itemized deductions include charitable donations, mortgage interest payments, and medical expenses.
4. Why Filing Is Important (AKA Don’t Procrastinate)
Filing is important because there’s no way around it if you make over a certain amount. Because figuring out what exemptions you qualify for and what deductions to take might take some time and digging, you should get started ASAP, not on April 15th or the day before.
3. Ok, So You Procrastinated
However, someone is always going to procrastinate for whatever reason, and the IRS knows that. You can file for an extension if you need more time. This is not a good idea if you’re putting it off because you don’t have the cash to pay it. If finances are the issue, you can use a credit card (if your bill is low) or go on a payment plan.
If you don’t pay your taxes, bad stuff can happen. The IRS will send you some scary letters and charge you fees for not paying. In very extreme cases (the big-name, Al Capone tax evasion cases), you can even do prison time. If you’re having trouble paying, you can talk to the IRS about a payment plan. They will take it easy on you if you do that, but not if you simply don’t pay.
1. Don’t Mess Up Your Filing Status
If you get one thing right out of this entire process, it needs to be your filing status. This is the question on the tax form that asks you if you’re single, married, etc. This status will affect how much you pay, and getting it wrong will be a huge hassle.
Do you have big plans in 2020? If you’re planning to get engaged or married in 2020, first off: congrats! Secondly, you want to make sure that your estate plans are in order before you move forward. Ensuring that your estate plan reflects the new addition of a spouse can save you quite a lot of headaches later on. Don’t worry—making an appointment with an estate planner won’t take too long, and it won’t be (too much of) a buzzkill on the upcoming nuptials. Here are some things to think about before you tie the knot.
Ah, the dreaded prenuptial agreement, AKA “a prenup.” A prenup provides asset protection, not just in the case of divorce but also in the case of death (which might be a more appealing way to sway your significant other into signing one). A prenuptial agreement addresses what happens with alimony and assets if either of these things occur. It also can address how you want your kids from another marriage to be treated in terms of asset protection. Additionally, a prenup can handle how debts are divided between spouses if there is a divorce or death. A prenuptial agreement is, of course, signed before you get married, unlike a postnuptial agreement.
A postnuptial agreement, as the name suggests, is signed after you get married, as opposed to being signed in contemplation of the marriage. A postnuptial agreement has effectively the same protections as a prenup; the timing is just different. In almost all states, this agreement must be in writing. In some states, it must be notarized. A postnup outlines the obligations and responsibilities of each partner in the event of death or divorce.
This makes the list because, if you’re in a time crunch and will be married before you can set up a time to make a prenup, a postnuptial agreement is a viable option so that you’re not left in the lurch.
Power of Attorney
A common misconception is that a spouse automatically becomes your power of attorney once you two are married. This is not true; you have to designate your spouse as your POA. A power of attorney is someone who has the ability to make decisions on your behalf in the event that you are unable to do so yourself. Obviously, this must be someone you can trust to behave rationally and uphold what they know to be your wishes for healthcare and finances. Hopefully, you feel that way about your spouses. Another common power of attorney choice is your children.
While a will isn’t the perfect way to protect your assets, it is better than nothing. If you are not married and you die intestate (without a will), your spouse-to-be will not inherit anything from you. They will receive nothing from your estate. Setting up a will or, even better, a trust, can ensure that you don’t leave your spouse hanging if you die before you are married.
Trusts are flexible, useful estate planning tools. If they are done correctly, you can avoid probate and its expenses, and you can keep your estate’s affairs private. A trust is a legal document that creates a fiduciary relationship between you, your trustee, and, later, your beneficiary. It is a way to transfer assets without going through probate. You can use a trust to transfer assets to your spouse, or you can even create one with specific provisions that ensure your kids will get a share of your estate. Trusts are very wide-ranging and can do a lot for asset protection.
Okay, so maybe this isn’t the most fun thing to do before you get married. But, these types of documents are essential to financial health. Take a break from cakes, tuxes, and dresses and get your estate plan with your new beau squared away.
According to divorce lawyers, January is “Divorce Month.” There are plenty of reasons for why January ends up being the busiest month in which to file divorce. Usually, families want to stick it out through the holidays before making a big chance. Who knows, maybe someone’s New Year’s Resolution is to get divorced.
Whatever the reason, there are some things you need to know when you’re in the process of getting divorced. And no, we won’t put you through the, “Are you sure you want to get divorced?” question. Here are five things to know about getting a divorce.
1. Get Your Financial Documents Together
Divorce relies heavily on documentation for the purposes of things such as alimony, marital property, and child support. Financial records, phone records in some cases, mortgages, and receipts for sale are all things you might have to show to a court to prove financial status or lack thereof. Start digging around for that stuff now, whether you have copies online or in boxes somewhere. It’s always wise to make copies of physical documents, just in case.
2. Update Your Estate Plan
You probably don’t want your spouse as your power of attorney, especially if you are dumping them, or vice versa. Update your estate plan to make sure that they are stricken from the plan where you want them to be. While in some states, divorce automatically invalidates some provisions, the pre-divorce limbo period doesn’t invalidate anything.
3. Ask an Attorney about Joint Bank Accounts/Credit Cards
Joint bank accounts and joint credit cards are tricky. They might have seemed like a good idea at the time, but now they’re a mess because the finances are all tangled up. Talk to an attorney about getting the finances separated and handling the joint bank accounts. You might need to call in an accountant, but the first step is talking to an attorney.
4. Custody Issues
A lot goes into custody. The prevailing standard in most states is the best interests of the child or children, and that “best interests test” depends on a whole penumbra of factors. You will likely need to sit down and work out your work schedule, financial stability, and housing situation when you’re discussing custody. The court will look to the best interests test when determining custody. It is best to keep custody battles between you and your spouse and avoid dragging kids into back-and-forth between the two of you.
5. Know When You Are/Aren’t Single
This one’s about adultery. If you’re still legally married, it is unwise to move in with or start a relationship with someone else, as your spouse could claim that as adultery. Even if you’re living separately, some jurisdictions will look on that as adultery. Adultery doesn’t affect the division of marital property, but it can affect other considerations of the process. Save relationships and dating for when this process is over. You’ll likely be far less stressed out and better able to focus on a new relationship when the divorce is settled, at any rate.
According to the CDC, the US divorce rate is 3.2 per 1,000 people. While this is a decrease, the decrease is caused by people not getting married, as opposed to just being better at getting married. All this to say: divorce is common. Don’t be afraid to ask for help or advice, as you are not alone through this process, though it might seem like that at times. Help is out there, and the first step is to talk to an attorney.
So, here’s the thing about New Year’s resolutions: they don’t always work out. Whether it’s a new diet, exercise plan, or attempt to become more organized, it’s not always easy to get a huge list of resolutions straightened out. Let us present to you a new idea: just one resolution. You can make the resolution to get your finances in order. This broad scope is not only going to be a huge accomplishment; it also will have a lot of long-term benefits.
The Problem with the Big List
A New Year’s resolution list can operate somewhat like a “To-Do” list, though it’s couched in more goal-achieving language. If you’ve always disliked to-do lists, fear not: Harvard Business Review is on your side. Harvard Business Review did a study on the effectiveness of to-do lists and found that they “don’t work.” Your brain can really only handle seven options before it mentally checks out. When it does check out, you end up ticking off the easy things on the list for a quick dopamine rush, avoiding the bigger projects.
An alternative to this is a different way to set goals: scheduling their completion at a certain time. So, if you choose to get your finances in order, you can schedule appointments with an estate planning attorney or sign up for money-management classes. This way, you avoid the to-do list rut and actually set yourself on a path to success.
What “Finances” to Get in Order
“Get your finances in order” can mean a lot of things. Whether you’re trying to cut spending or pay off bills, financial health involves a lot of different, occasionally unpleasant things. We’d all rather buy a fun gift for ourselves than pay off an overdue bill. However, financial healthiness is a goal that will involve some hard work.
One part of achieving financial health is asset protection, and this doesn’t have to be painful at all. Setting up an estate plan will allow you to decide where you want your assets to go after you die. It also allows you to set up end-of-life and sick care for yourself in the event that you become unwell. Another type of asset protection can involve setting up a trust for loved ones, thereby providing for their financial health too. That’s the beauty of this goal—it helps protect other people as well.
Figure Out What the Issue Is
When it comes to achieving financial health, we usually have to figure out first what the problem is. Luckily, most of us probably have some sense of where the financial health issue is. If you don’t, go look at your bank account. That will tell you what you’ve been spending money on, whether it’s Amazon purchases or other needless spending. This will help you recognize where you need improvement. You can always talk to a financial advisor about getting yourself in check. Remember, this goal is more of a long-term one.
Long- vs. Short-Term Thinking
Just like the common goals of losing weight or eating healthy, achieving financial wellness is one of those goals that isn’t going to have immediate, drastic results right away. Often, you can simply chip away at problems until they become manageable. But that is a good start, in and of itself. Estate planning, especially, is a financial tool that will pay off in the long-term.
Hopefully, we’ve convinced you to give our way a try. Instead of big, exhaustive New Year’s list, which can seem daunting at worst and a throwaway item at best, try just one New Year’s resolution that will have long-term impacts: improving your finances.
As a grandparent (or a loved one of a grandparent), you know how much you love your grandkids. You want to be able to provide for them, at least in part, whether that involves time, attention, or even money. If you want to protect your assets and help your grandchildren out later, you can do so through the establishment of a trust. In this article, we’ll talk about the benefits of establishing a trust for your grandkids. This is by no means an exhaustive look—it’s more of an overview—but it’ll get the basics down.
What is a Trust?
Essentially, a trust is a legal construct. It is a three-party relationship between you, your grandchildren, and a trustee. You transfer nominal title of the property to a trustee, who then transfers actual title of the property to your grandchildren at an agreed-upon time period. Sometimes, grandparents will choose certain milestones to release property or money to their grandchildren (eighteenth birthday, college graduation, etc.). Or, they’ll set aside money to be transferred when the grandchild is attempting to meet a specific goal, like buying a home or starting their own business.
How Do I Set One Up?
Trusts aren’t too difficult to set up. An attorney will need to work with you to set one up, and you also might have to involve your bank to discuss investment options or other financial planning considerations. What is for sure is that you’ll need an attorney. An attorney will help you decide how you want to structure your trust. For example, if you set up a gift trust, you will not be able to revoke it and reclaim your money. If that doesn’t sound appealing to you, there are other types of trusts you can create. However, the bottom line is that you will need a lawyer.
Types of Trusts
If you’re leaving money or assets to just a few grandchildren, you may consider setting up an individual trust for each grandchild. Grandparents usually put equal amounts of money into every grandchild’s trust. Again, this is dependent on what works best for your family size. A family pot type of trust is another option.
The family trust fund is another option. If you have a lot of people in your family (and thus a lot of beneficiaries), you might start a large fund and have your trustee distribute assets at certain times or upon certain occasions. This pot of money, so to speak, is a single trust for all your grandchildren and their descendants. Note that these trusts require the trustee to have a lot of discretion, so make sure you are okay with that.
What Do These Include?
Don’t worry—these trusts are not a free for all. You can set up your trust with instructions and rules that govern the disbursement of the money. For example, you might set up a milestone distribution program as discussed above, or you could set aside money to pay for college tuition. Involve your trustee in these discussions.
Protecting the Trust
Last, but certainly not least, is the idea of protecting your trust. Grandchildren don’t always behave according to plan. There might be substance abuse issues or similar problems that would caution a reasonable person to hold back on fund distribution. Again, this is where discretion to the trustee comes in handy. You can leave instructions with him or her to hold back on disbursing funds in the event of an issue with the proposed beneficiary.
An estate planning attorney will help you work out the nitty-gritty. You will need to talk to your family and work with them to decide how you want to structure your trust and what specifications you need to think about. It goes without saying, but every family is different. Your family has its own set of challenges, and structuring a trust with those in mind will be a great long-term benefit.
Let’s be honest: one of the best things about the holidays is the presents. Regardless of what holiday you celebrate, gifts are bound to be at least a small part of the celebrations. When it comes to holiday spending, let us introduce another idea. While you can’t exactly wrap a “secure financial future” in a shiny box; you can still make that one of your gifts this year. Here’s how.
Keeping Track of What Really Matters
When you get past the gifts and decorations, what really matters is family. You’ve probably been planning a family get-together over the holidays for some time now. We all want to catch up with relatives we don’t see often. So, as family is certainly one of the biggest reasons we’re all celebrating, it makes sense that a gift should include whatever benefits family most. And a secure financial future is one of the best ways to benefit your loved ones.
Benefits of an Estate Plan
With an estate plan, things are not uncertain. You can divvy up where your assets will go after you pass on, and you will save your family the immense time and headache that comes from probate court (where people without an estate plan or only a partial one go). In probate court, a judge will divide up your assets, paying off your creditors first. Your family may not get anything. Through estate planning, you can use financial tools and trusts to transfer property to your family that creditors likely will not be able to touch.
Who Can Set One Up?
Anyone can set up an estate planning appointment. You can set one up for your parents or grandparents, or you can set one up for yourself. Sometimes, people believe that they don’t need an estate plan because they don’t have much of an estate. That’s simply not true—you don’t to be millionaire (or even have a fraction of a million dollars) to get your affairs in order and plan for the future. Think about setting up an appointment for a loved one or for yourself.
Things to Think About
When you’re considering setting up an estate plan, it helps to go through your assets and family individually. This isn’t a small project. Estate plans also include directives for end-of-life and sick care. An estate plan can also include the appointment of a power of attorney. Make sure you talk with your family to keep them included in the estate plan. This is another reason why the holidays are the best time to take action. You’re already with your family, so that may help you get your bearings on how you want your estate plan to look.
Think in the Long Term
Luckily, big project though it is, an estate plan is not a one-and-done deal. You and your attorney will create an estate plan together, but that certainly won’t be the end of the road. Families change over time, as do family dynamics. What you want at one point might not be what you want at another. Maybe you will decide to change your power of attorney or add on a new person to receive an inheritance. Again, this is a long-term process. While it doesn’t have to be arduous (and it usually is not), you don’t have to worry about getting it 100% complete the first time you take a crack at it.
Hopefully, we’ve managed to convince you (at least a little) of the benefits of including your loved ones in an estate plan this year. While this might not seem flashy, it is a gift that will last a lifetime—and beyond.
Thanksgiving is a time to give grace for what you have. Undoubtedly, at the top of almost everyone’s “Giving thanks” list will be their families and friends. Family and friends are what make our lives worthwhile, and we want to make sure that we provide for them even after we are gone. One way to do that is through estate planning. This Thanksgiving, give thanks in a tangible way by protecting your family long after you’re gone. Here is how:
Using a Trust
Trusts are one of the best ways to give thanks tangibly. A trust is a three-party relationship between a beneficiary, donor, and a trustee. The donor is the person who signs over title to the property to the trustee. The trustee is entrusted (see, some legal terms do make sense) with the property until a designated date. The date, picked by the donor, is the date on which the trustee transfers actual and legal title of the property to the beneficiary. The beneficiary is the intended recipient of the trust from the start.
Types of Trusts
As with anything in the law, nothing is ever 100% straightforward, and there are many different types of trusts from which to choose. While these options might seem confusing, the variety of choices is actually a good thing. An estate planning attorney will be able to tell you which, in his or her professional judgment, is the best setup for you and your situation.
We’ll talk about five common types of trusts today: revocable, irrevocable, asset protection, charitable, and constructive.
Revocable v. Irrevocable Trusts
As mentioned, a trust is a legal document. Trusts can be made revocable or irrevocable. Revocable trusts are not quite tools of asset protection in the same way that irrevocable trusts are. Revocable trusts are also called living trusts. With a revocable trust, the donor (person granting the property) still holds onto the ability to take away the property during their lifetime. However, once the donor dies, the revocable trust usually becomes irrevocable.
A revocable trust helps you avoid probate. An irrevocable trust cannot be changed or removed by the donor. No one can take the property from the trust or modify the terms. It’s effectively set in stone.
Asset Protection Trusts
These types of trusts are designed to ward off claims from future creditors. This trust insulates your assets from creditors, and they are usually irrevocable for aa set term of years and the donor is not the beneficiary. The trust places the assets out of the hands of creditors. After a period of time, undistributed assets that were in the trust revert back to the donor. These undistributed assets usually are returned to the donor as long as there is no remaining creditors to try to take the property.
If you have a charity that you really like, you might consider a charitable trust. These trusts can benefit a specific charity, or they can be used to benefit the public in general. These trusts are useful as a way to avoid gift or estate taxes. Consider these trusts both an altruistic tool, as well as a savvy financial one.
A constructive trust is the trickiest on this list, though it sounds deceptively simple on the surface. A constructive trust is implied. The court creates it based on certain facts. The court might decide, for example, that the owner of property intended to form a trust even though there was no formal trust document. Therefore, the court might honor the owner’s intent and distribute the property to someone else. Constructive trusts generally take fairness into account.
These are really just the basics. One good thing about estate planning law is that it doesn’t skimp on the types of tools and financial ways to protect your assets. There are many more ways you can transfer property to family members or friends, and consulting an estate planner is the best first step towards doing so.
According to Pew Research Center, there are approximately forty million Americans with special needs. This is about 12.6% of the population. Special needs has a very distinct legal definition by law, and the law has also evolved to ensure that families and friends are able to help special needs people carry out their lives as normally as possible. In this article, we’ll talk about the basic need-to-know information regarding special needs planning.
What are “Special Needs?”
That question is very, very broad, and the law takes paragraph after paragraph to explain what it considers to be a special needs individual. Basically, there are two groups of people with special needs: children and adults.
Special needs children are minors who require necessities and care that other children do not. This may be due to a physical, mental, and/or emotional disability. The state usually declares a child “special needs” for the purpose of offering them assistance and benefits to provide for the child’s well-being, which requires special attention to grow.
A special needs adult is an adult who has reached majority and has a mental, emotional, and/or physical disability. Often, these adults have carried over a developmental disability from childhood. As with children, the state designates adults as special needs for the purposes of providing benefits and assistance to help these adults maintain their well-being, as they are, to one degree or another, unable to do so in comparison to the non-special-need population.
Obviously, these definitions are not exhaustive. On paper, these definitions seem simple and somewhat understated, but caring for those with special needs is never quite so simple.
What Can Special Needs Planning Include
Special needs planning, such as setting up a special needs trust, provides for benefits that a beneficiary could not otherwise obtain because these aren’t covered by the government or by a private agency. These can include dental expenses, vision, special equipment, spending money, special dietary needs, and other costs that are essential to quality of life but may not be covered under social security or disability. A special needs trust allows you to provide for a special needs individual without defeating their eligibility for government assistance.
Setting Up a Special Needs Trust
A special needs trust allows you to set aside money and assets to be conferred to the special needs beneficiary at your direction. These trusts can be set up with the help of an attorney. Generally, such a trust will have a provision that will terminate it if the beneficiary would be made ineligible for government assistance as a result of the trust.
Who Can Best Benefit From Special Needs Planning
Parents with special needs children are the main people who (aside from the beneficiaries themselves, of course) benefit from special needs planning. According to Pew Research Center, the most common disabilities are those that involve issues with independent living or walking. Over 20 million adults have “serious difficulty” walking. 13 million American adults also reported having serious cognitive impairments, while 14 million adults reported having major difficulties running errands alone. These independent living and mobility concerns mean that there are many small, niche costs and expenses that government assistance might not foresee. Therefore, providing for your child and helping them with independent or semi-independent living is one of the main reasons to set up a special needs estate plan.
Special needs is a whole field of law that consists of attorneys, educators, legislators, and advocates who fight to make sure that everyone in America is treated equally and given the same opportunities, regardless of ability. Some disabilities are visible, while others are invisible, but all special needs individuals should be cared for. Special needs planning will allow you to provide for your loved ones’ special needs after you’re gone, giving you peace of mind that they will be cared for.
Time flies when you’re having fun, as the old saying goes. November marks our firm’s 10-year anniversary. We’ve helped many people with their estate planning, tackling legal problems and forming relationships with our clients that have been rewarding and long-lasting. It seems like ten years went by in the blink of an eye.
In this article, to celebrate ten years, we’ll give you ten pieces of advice for setting up a great estate plan.
10. Store Your Documents Wisely
We live in Florida, and hurricanes are all-too-common. If you have estate-planning-related documents sitting in a box that is neither water nor flame proof, that is likely not going to end well. One basement flood, and you’re in for a whole world of headaches. Store your docs on a secure server. While it’s great to keep the originals, talk to an attorney about ways to make them digital and safe.
9. Don’t DIY It
This one might seem a little self-serving, but it’s true. Do-it-yourself legal services often cause way more headaches than they prevent. Why? Because law is tricky. One wrong word and your family might get tied up in probate court for half a year. There is special language required to set up trusts, healthcare directives, and power of attorney forms, and it can be difficult. Contacting an attorney is the bets choice.
8. Avoid Funeral Prepayment Plans
Funeral prepayment plans seem sensible on the surface. You want a nice funeral that won’t run your family into the ground financially. The prepaid plan is an arrangement between your choice of funeral home and you. However, these arrangements can be unreliable, as funeral homes do occasionally go out of business. Also, many prepayment plans are not able to be relocated. Your money is better off collecting interest in a bank to be used later for the funeral, as opposed to way in advance.
7. Be Tax Savvy
Not everyone is going to get hit with an estate tax, but some people (the .01%) will. If your estate is worth over $5.49 million, you may owe an estate tax. There are ways to minimize this tax through tools such as irrevocable trusts or charitable trusts, but you can only minimize taxation legally if you know what you’re looking at paying.
6. Insurance, Insurance, Insurance
Consider life insurance. Insurance is something you don’t realize you need until it’s too late. Life insurance will benefit and protect your family for years to come, and it is a good way to provide extra financial security to your loved ones.
5. Keep It Updated
Setting up your estate plan is not automatically the end of the road. You have to make sure it is kept updated for new family members, new financial situations, and things such as that. Families change, and you want your estate plan to change with your family, if necessary.
4. Pick a Great Power of Attorney
A power of attorney is the person who makes legal, financial, and/or healthcare decisions on your behalf. Needless to say, you want to make sure that the POA is someone who is very trustworthy and conscientious. And if they turn out not to be…
3. Don’t Be Afraid to Fire Your POA
…then don’t hesitate to fire them. It might cause familial tension, but you shouldn’t hold on to the POA just because you want to be nice to them. The power of attorney needs to go to and remain with the person who is best for the job.
2. Put Your Wishes Front & Center
A good example of this is a healthcare directive. This directive will let you tell a doctor or hospital your wishes for end of life care ahead of time so that, if you’re too sick to communicate them yourself, you can still make sure what you want is honored.
1. Avoid Probate Court
Above all, your goal should be to avoid probate court. Probate court is where estates go to get divvied up, and it is a drag, financially and time-wise. A good estate plan can help you avoid probate court.
Ten years, ten tips. These are definitely not exhaustive, and we could write a 1,000-page book on everything to know about estate planning. But hey! That’s why we’re the lawyers. These ten items for your estate to-do list will be put into even better practice if you hire an estate planning attorney.
Halloween is approaching quickly, and the spooky season is already in full swing. Whether you’re a haunted house person or someone who’s a little less adventurous, the Halloween season is a way for you to celebrate the season. The candy, pumpkins, and horror movies aside, Halloween isn’t the only scary thing out there. While “probate court” might sound about as scary as a Disney movie, there’s a lot more to those two words than meets the eye. Here are the top ten spookiest things about probate court:
10. The Time
Probate court is where estates go to be divided up after the decedent’s (dead person’s) death. The estates are carved up like Jack O’ Lanterns to pay off debts and dissolve the disputes as quickly as possible. However, “quickly” doesn’t mean the same thing in the court system that it means to the rest of the world. The average probate process takes from several months to a year. That’s a long time to be tangled up in the courts.
9. Dragging Your Family Through All That
Not to mention, you won’t be the one in court for several months to a year—your family will be. They’ll be stuck in the snowfall of documents and court dates, and it will be exhausting and boring and tiring. If it couldn’t be avoided, that would be one thing. But estate planning that is thorough would prevent you from dragging your family through the court system.
8. Your Prized Possessions—Gone
You probably have favorite possessions. Maybe it’s a prized painting or a savings account that you’ve been letting sit for years. If your estate is left with no trust or will, probate will decide how your assets are divided up. That prized painting might be sold and the proceeds given to a creditor or used to pay off court fees (see #3).
7. Small Business Owners Beware
Small business owners need estate planning just as much as individuals do. If there is no estate plan and the business is part of the estate, it might be taxed to death or become the subject of dispute after dispute. Even if the small business issue is settled, the legal furor surrounding your business won’t be good for it. Something you’ve worked so hard on deserves to be kept out of the probate courts.
The court system is also confusing. Lawyers spend three years figuring out the law and taking the bar exam to prove they are competent in it. And even lawyers acknowledge that the system is confusing. Probate court is no exception.
5. Not A Good Legacy to Leave Behind
Above all, probate court should not be what your family remembers about you. When you leave behind a legacy, you want it to be something your family will celebrate, not think of with any negative connotations. And probate court is nothing if not a negative-connotation-producer.
4. You’re One of Many
Your home and assets are unique to you. You know everything about them, and every asset likely has some special attachment for you. However, probate court makes you one of many estates getting sorted out. There won’t be much regard for divvying up your possessions. Your estate deserves more than a disposition by someone who has never met you.
3. The Expense
Court fees are expensive. The expenses will come from your estate, first and foremost. However, the hundreds of dollars of fees add up, unsurprisingly. Probate court’s expense is definitely one of the spookiest things about it. The fees take money from your estate that could have gone to your loved ones.
2. Executors You Might Not Have Picked
The court appoints an executor for you. They’ll start with family, but they might appoint someone that you personally would not have picked. However, with no estate plan there to avoid it, your first choice for executor might get totally overlooked and your estate placed in the hands of someone you didn’t want.
Debtors are the top spot on this special Halloween edition of the horrors of probate court. Your assets will pay off creditors. Without an estate plan to set aside trusts or other instruments, your prized possessions could go straight into the hands of your creditors, not your family.
Hopefully, these top ten scariest things about probate have convinced you to hire an estate attorney and make sure your family doesn’t get a close-up and personal look at the ghouls and goblins of probate court. Happy Halloween!