MSNBC recently wrote about the wealthy not creating estate plans because many of their estates fall under the estate tax exemption. In 2015, the estate tax exemption is $5,430,000 per person (meaning $10,860,000 per couple). Prior to the 2000s, estate planning was focused on estate taxes; however, with the higher exemption limits, most families will not have to deal with estate taxes at all.
Estate planning is more importantly a method to control what you want to do with your assets when you’re alive and unable to make decisions and when you’re deceased. It allows you to pass property to the people you want. If you do nothing, your “estate” will be decided by a set of California laws, known as dying intestate or intestacy. This might not be what you want. Further, if you do nothing, your estate may need to go to probate, which is a court process to pass assets to your closest living relatives. The costs associated with probate can be high.
Part of any estate plan is to include a revocable living trust and will to avoid probate. Further, an estate plan includes a power of attorney and advance healthcare directive to address issues while you are alive and unable to make decisions. These important documents are not just to minimize estate taxes, but allow certainty and minimize costs associated with passing property to your heirs.
The article is “Wealthy suffer from ‘estate planning fatigue.'”