By Lee Phillips
Inheritance is the way assets are passed to your family or heirs once you have died. Assets are pretty much anything you own such as real estate, stock certificates or bank accounts. The average inheritance passed in the United States today is about $200,000. Yours may be a little more or less, but for most folks, their inheritance will be the biggest financial deal they will ever handle. If you are interested in saving your inheritance, planning today, could actually increase the amount you get. You could even double it in many cases.
How is it possible to double your inheritance? Two words: estate planning. When most people think of estate planning they think of a will. And it is true, if a will is not set up at your death, passing your inheritance becomes complicated. With complication, comes expense and time. But there is more to a good estate plan than a will. Just like not having a will can cost you, not having the other pieces of an estate plan can complicate the passing of an inheritance.
To prevent this complication to you inheritance, you should ask, “Do my parents have their “affairs in order?” If not you should be worried. Look what could happen. Say your parent’s estate is worth the average $200,000. That will include their house, their life insurance, brokerage and bank accounts. If your parents die without a proper estate plan, probate will take $10,000 out of your inheritance. Plus the 18 months delay in claiming the assets and the time and effort. Then depending on the size your parent’s estate and which state they live in, there could be state and federal estate taxes that will take a chunk.
There are other costs that can take from your inheritance. During the final years of a parent’s life, the family can lose a lot of the estate in rest home expenses or legal fees. Plus as your parents age, they can become infirm and unable to care for their affairs. When this happens, you cannot just take over. You have to go to court and get the judge to sign an order that declares your parents are incompetent. This is embarrassing for them and a matter of public record. You must then get the judge to give you permission to manage their affairs. This is an unnecessary, time consuming and costly legal procedure. If a Durable Power of Attorney is in place none of this will happen.
Good estate planning is worth the effort, not just in the inheritance, money and time savings, but in the peace of mind it will give your family. However, often it is difficult to discuss this with your parents. Your parents may feel threatened that you are grabbing their money, threatening their independence, or are just waiting for them to die. Let’s face it nobody wants to face their own mortality. So you avoid it and nothing gets done.
The sooner the estate planning discussion takes place the better. If you don’t want to approach this discussion, I recommend you give your parents a copy of Protecting Your Financial Future. Challenge them to read the first two chapters. It has been my experience that they not only finish the book, they get their estate planning in place. The book is available on Amazon, but you can get it on the website at a discount. An inheritance is a big deal. Getting the estate planning taken care of early is not just good business and financial management, it gives peace of mind. The worst time to try and take care of estate planning is when someone is in intensive care.
Experts predict $10 trillion in inheritance will be transferred in the next two decades. Will you get your share? Is your family’s estate planning in place? If not, now is the time to get it done. After all, you’re the one who will have to pay unnecessary taxes and endure time-consuming court procedures. Without some forethought and planning, you could be facing a lot of wasted time and money from your inheritance, in addition to a lot of frustration. Make the effort to avoid this and get an estate plan in place.