By SHEL SEGAL
Whether you’re rich or poor, it doesn’t matter. You still need a proper estate plan.
That’s the message that longtime estate planning attorney Samuel B. Ledwitz wants to get out to you in 2023.
He said the reason most people never have a proper plan created is just purely because of procrastination.
“Most people do know by now they have to do a proper estate plan,” said Ledwitz, president and managing partner of estate planning law firm The Law Firm of Bezaire, Ledwitz & Associates. “This is especially true in the state of California since the threshold for probate is at $184,500. And it’s even less if it’s real property. So, if you’re living in the Los Angeles area and you own a home, you’re pretty much a candidate for probate.
“We know this is on your to-do list. You were supposed to do it in 2020, 2021, 2022. You should really make this the year to do this.”
While Ledwitz said many people think you have to do a lot of research and legwork before seeing an estate planning attorney, he said the process is pretty easy to start with very little that needs to be done ahead of time.
“There isn’t much mental preparation you need to visit an estate planning attorney,” he said. “No one is going to ask for your Social Security number or your bank account numbers. We’re not into identity theft. We need to know the basics, like where do you live? What assets do you have? Where do you bank? And we need to know how much money you think you have. Not the exact amount, but a rough idea. We need to know if you own a house, and approximately how much you think it’s worth along with how much you owe on it. These are things you probably already know.”
Some of the assets of interest to him, he said, would include any life insurance policies, IRAs, bank accounts, personal property like jewelry or artwork or anything else of great value, or even a gun collection or a very valuable baseball card.
As you move through the process, how much in the way of assets does become important, especially when it comes to the federal inheritance tax.
“Your net worth does affect how we do things,” Ledwitz said. “Your net worth is tied to the death tax exemption amount. So, while the threshold for probate isn’t very high, the amount for the death tax exemption is just over $12 million. That means the trust can get rather complicated if the net worth is over that amount. If it’s under, you’re not going to have a tax problem. And most people are way under that.”
But if you don’t own a house or have enough cash to qualify for probate, why do you still need to do an estate plan? Ledwitz explained there are other reasons.
“Let’s say you don’t have a house and don’t have much in the way of assets,” he said. “You really do still need this. You could become incapacitated and need someone to get access to your government benefits to help you. A durable power of attorney is needed. Who would make your medical decisions? You would need an advanced healthcare directive and a HIPAA (Health Insurance Portability and Accountability Act) waiver. Maybe not everybody needs the whole estate plan. But if you are over 18, there are definitely parts of it you need.”
Guardianship documents are also important to create when you have minor children, Ledwitz said.
“You especially want to do this if you have kids,” he said. “Questions you might think about are who is going to look after your kids? Do you really want a 15-year-old getting all that money now? Does your 7-year-old have additional needs that need to be addressed? There might be a million caveats here. That’s why it is very important that you decide all this ahead of time as opposed to your family fighting it out in public in court. I’d rather ask you than have someone guess on your behalf and have the judge make the decision.”
Ledwitz said there is definitely a large different in cost between doing an estate plan and not doing one, adding your heirs will pay much greater for your inaction down the road.
“If you do nothing, the probate attorney fee on a $500,000 house in California is $13,000,” he said. “Also, there are extraordinary fees. If I do anything above and beyond of the standard work, I get to ask the judge for more compensation. You’re also paying for the court fee, the executor fee, publication fees, possibly a bond and for an appraisal of your house. So, there’s all these people you need to pay.”
And the cost of doing something ahead of time?
“You can get a living trust, which can range from $1,500 to $4,000,” Ledwitz said. “And make sure the attorney has a free consultation. Once you do your estate plan you don’t have to worry about it for some time, I like to see you every three to five years to do a tune-up. Otherwise, you’re good to go.”
If you would like to discuss any aspect of a proper Estate Plan, please phone The Law Firm of Bezaire, Ledwitz & Associates at (626) 398-0100 or log onto www.SmartEstatePlans.com.