A lot of people question why they should work with an estate planning lawyer to put a plan in place. They assume that it is a relatively simple matter that you can handle without any professional guidance.
In fact, there are some very good reasons to engage legal counsel, and we will share five of them in this post.
Efficient Estate Administration
Far too many people assume that a simple will is the right estate planning document to use, but in many instances, this is not the case at all.
Do you want your loved ones to receive their inheritances in a timely manner after your passing? If you use a will, it would be admitted to probate, and the inheritors would be forced to play a lengthy waiting game.
No inheritances are distributed until the estate has been probated by the court, and it will take eight or nine months at minimum in most jurisdictions. Probate expenses absorb a portion of the estate, and there is a loss of privacy, because probate records are readily available to the public.
A living trust can be used as an alternative to a will as your asset transfer vehicle. You would act as the trustee while you are living, so there would be no loss of control of the assets.
After your death, the trustee would distribute assets to the beneficiaries outside of probate.
Mitigate Estate Tax Exposure
The federal estate tax carries a 40 percent top rate, and it is applicable on the portion of an estate that exceeds $11.7 million. This number may be reduced in the near future, because the For the 99.5 Percent Act is making its way through the legislative process.
It would reduce the exclusion to $3.5 million, and even if this measure does not pass, the exclusion is going down to $5.49 million in the beginning of 2026. Here in Hawaii, we have a state-level estate tax, and the exclusion is $5.49 million in 2021.
If your estate is going to be exposed to either or both of these taxes, we can help you implement an estate tax efficiency strategy that will preserve your legacy.
Prevent a Confusing Situation
Your family would be forced to deal with a confusing situation if you pass away without any estate planning documents. People that are not familiar with the intestacy laws would have no understanding of the correct way to proceed.
This is a difficult position to be placed in when you are grieving, and the stress can contribute to tension and disagreement among your loved ones. You can prevent this outcome if you take the time to plan your estate properly.
If you leave a direct inheritance to someone that is not ready to handle a windfall, they may have nowhere to turn if they run into financial trouble after they burn through their bequest.
Fortunately, you can provide safeguards if you work with an attorney to plan your estate. A revocable living trust can include a spendthrift clause. After your death, the trust would become irrevocable, and the principal would be protected from creditors.
You could instruct the trustee to distribute a certain amount each month or dictate some other incremental distribution arrangement to limit the beneficiary’s spending ability.
Protect Your Legacy From Nursing Home Costs
Over half of senior citizens will require paid long-term care, and Medicare does not pay for custodial care. Nursing homes are very expensive, so an extended stay can consume all or most of the legacy that you would like to pass along to your loved ones.
Medicaid will cover long-term care, and you can use an income only Medicaid trust to develop a financial profile that will lead to future eligibility. Once again, we can gain an understanding of your situation and make the appropriate recommendations.
Take Action Today!
Today is the day for action if you are currently unprepared. We have estate planning offices on Maui, the Big Island, and Oahu, and you can schedule a consultation at the location near you if you call us at 808-531-5391.
There is also a contact form on this site you can use to send us a message, and if you reach out electronically, you will receive a prompt response.