It has never been a better time to be the heir of an estate or trust. The economic boom has brought a tremendous rise in individual wealth. Retirement and investment accounts have swelled as the market has risen to historic highs. This includes the wealth of your grandparents, parents and other loved ones from who you may stand to receive an inheritance. At some point, a large portion of this wealth will be passed down to the next generation.
In the past, the greatest perceived threat to your inheritance was the estate tax. With rates as high as 40%, the estate tax could wipe out nearly half of your inheritance. Thankfully, for most of us, this is no longer the case. Trump’s Tax Cuts and Jobs Act of 2017 allows a single person to pass $10,980,000 to their heirs without incurring estate tax. Likewise, a married couple can pass $22,400,000 to their heirs without incurring estate tax. As a result, the estate tax has been nearly eliminated for everyone but the top 1%.
With the Estate tax out of the way, what is the biggest threat to your inheritance? Your Family!
TD Wealth surveyed 109 estate planning professionals in January at the 52nd Annual Heckerling Institute on Estate Planning in Orlando, Florida. Surprisingly, 44 percent of attorneys, trust officers and accountants cited family conflicts as the biggest threat to estate planning. Why? Because our family structures are far more complicated than in the past. Blended families, multiple marriages, and children from prior marriages all create unique challenges for your estate plan.
How To Prevent Your Heirs From Fighting
Create an Estate Plan
Perhaps the easiest and most effective way to prevent heirs from fighting is by having an estate plan. A carefully drafted will or trust ensures that your last wishes regarding the distribution of your property are known. This goes a long way to quell any family disputes, particularly if you have a complex family structure.
Review Estate Plan Often
With families becoming more fluid it is imperative that an estate plan or trust is reviewed regularly. Estate plans should be reviewed and updated with each marriage, divorce, or birth in the family. This includes regularly updating your beneficiary designations for your life insurance and retirement accounts. Otherwise an unintentional heir may end up receiving a portion of the estate or trust.
Talk About Your Estate Plan
Modern families can be very complex. Children from prior relationships, along with multiple sets of in-laws and grandchildren can create a competitive environment for your loved ones. Ultimately, this can lead to tension among different portions or segments of a family. Do not be afraid to address conflict. Communication is key to prevent competing interests from boiling over. Being candid can reduce tension among heirs because they know your wishes. It also provides an excellent opportunity to set expectations as to what an heir stands to receive. Surprisingly, many heirs—even of modest estates—expect to receive hundreds of thousands of dollars from their loved ones. When they don’t, they often blame other family members for “stealing” and conflict ensues.
We can Help!
Would you like to learn more? If so, we can help. Call our Michigan estate planning attorney today! Our lawyer’s office is located in Plymouth, Michigan. We provide estate planning services to all of Plymouth, Canton, Northville, Novi, Livonia, Commerce, Farmington and Farmington Hills. We offer exceptional legal services in the areas of wills. trusts , special needs trusts, probate, living trusts, revocable trusts, charitable trusts, medical power of attorney, durable power of attorney, and more!
About the Author: Aaron R. Shahan is an attorney at Atlas Law, PLC. Aaron dedicates his practice to virtually all aspects of estate planning, elder law and probate.
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