Some clients think that estate planning is only for the wealthy – to help them save on taxes. However, there are many reasons to implement a solid estate plan, most of which have nothing to do with estate taxes. There are innumerable practical reasons, but I wanted to touch upon one of those reasons that occur more often than you think.
One of my clients recently got a divorce. The big sore spot in his marriage surrounded finances – more specifically, his wife spent every dime he made. Financial problems are among the top reasons for the high divorce rate in this country.
He came to see me about doing an estate plan, but he wasn’t quite sure if creating one was a good idea. He asked, “Rob, what if I do nothing at all? What will happen to my money, my real estate, etc.?” I answered, “Well, if you do nothing, and you remain unmarried, your estate will eventually go to your daughter.” He said, “Perfect, I guess I don’t need to do anything!”
Before he could make his way out the door, I asked, “Wait a minute, how old is your daughter?” He answered, “She’s eight years old.” I explained that before any money would go to his daughter via the probate process (which would be necessary without any estate planning documents), the court would insist the money be handled by his daughter’s guardian. I asked, “So who would likely be your daughter’s guardian when you pass away?” He paused. ”My ex-wife!” I said, “Exactly, she’d be handling all the money for your daughter.”
My client immediately engaged my services so we could create an estate plan that preserved the money for his daughter, and made sure that any of the estate would pass to her in a responsible manner. The ex-wife was removed from the equation. She would not be able to have free access to his hard-earned money.
Therefore, it is important to know that while some planning has to do with saving taxes and fees, most planning is about creating legal documents that often serve basic, practical purposes. If you’ve recently been divorced, and especially if you have young kids, estate planning can really serve an important goal.
For more information, please call 818-414-7100 and visit www.mansourlaw.com .