True or false – an estate plan benefits those with less money more than it does the wealthy?
This was the very question asked at a recent networking engagement. Those in attendance included real estate, website design, finance, and legal professionals.
So, how did the professionals do?
Close to two thirds of the room guessed the correct answer. Still, just over a third did not. So which is it, true or false?
It is absolutely true. Estate plans drastically favor those with less money.
How?
Simply put, the wealthy can afford costs associated with probate. Although probate isn’t enjoyable for anyone regardless of their financial standing, the wealthy have the means to weather the storm. Meaning, they have the ability to pay additional costs and taxes accrued on inherited properties, vehicles, moneys, etc.
On the other hand, most middle class people or families simply don’t have as much if any disposable income to pay additional costs (even temporary ones). Therefore it is a very safe assumption those with less will benefit much more by not having amassed extra expenses.
Wait a minute. Where there is an inheritance there is a Will. So why are we talking probate?
Although employing a Will helps make probate proceedings quicker and more efficient, it’s a Trust that is needed to prevent the proceedings altogether.
Think of it this way; being the beneficiary of a Trust means avoiding probate, not accruing additional costs, and being able to receive your inheritance with little wait time. Being the beneficiary of a Will without a Trust means you’re headed for probate; albeit a far simpler, gentler, and quicker probate.
Here is another truth to consider. Waiting months to collect one’s inheritance can greatly inconvenience the wealthy, but having to pay additional and unexpected taxes on that inheritance could cripple the rest of us.
