And How to Start the Estate Planning Process
Most people understand the importance of preparing an estate plan yet doing so can be an overwhelming task. However, there are important reasons why, regardless of your age or family situation, you should consider getting the process started sooner rather than later. For the following reasons, don’t wait to speak to an attorney about estate planning.
An estate plan can be useful while you’re alive.
If you are an athlete in a high-risk sport, such as football or boxing, you have a higher chance of becoming injured or incapacitated on the job. Should this occur and you are unable to make decisions for yourself, having a solid estate plan in place can help protect your interests because you will have designated a trusted individual to step in and make decisions. Without an estate plan, your family or friends may have to go to court to gain the authority to act on your behalf, and there’s no guarantee that the person acting in this role is the person you would have chosen to do so.
A well-prepared estate plan gives you agency over what happens with your money after you have passed away.
You likely have ideas about how your assets and possessions should be passed along following your death, but those desires are worthless if they are not properly communicated. Preparing an estate plan allows you to designate how you would like your possessions to be divided between family, friends and/or charities after you die. Providing clear instructions can also reduce unpleasant disagreements among your family members. No one wants to think that the division of their estate will cause a schism in their family after they have passed, but that can be exactly what happens if your wishes are unclear.
An estate plan helps avoid the slow and expensive process of resolving a messy estate.
Without proper planning, your estate can take significant time and effort to resolve. In some counties, it may take weeks to get an initial appointment with the probate court to simply begin the process. In the meantime, your family may be unable to pay necessary expenses because your assets remain tied up within the estate.
In addition, probate fees and taxes can be a burden for even relatively small estates, not to mention the large estates of many pro sports and entertainment professionals. If your family requires legal advice to resolve issues in the estate, there will be additional legal fees. With proper planning, however, much of this delay and added expense can be avoided. Estate planning can help protect your family and ensure they are not put through more frustration than necessary.
An estate plan can protect your family’s privacy.
In many jurisdictions, wills are considered public record, meaning that anyone can see who was designated as an heir in your will. If you are a well-known athlete or entertainer, the paparazzi may have a field day sharing your most personal information. Distant family members and “friends” may come out of the woodwork to solicit your beneficiaries. At the very least, this can cause your family to be bombarded with advertisements from companies trying to sell their services. Proper estate planning can protect your privacy and the privacy of your loved ones.
A properly structured estate plan can lead to lower taxes.
For many people, the federal estate tax exemption has been raised to a point where it is no longer a concern; however, the estates of many successful professional athletes and entertainers exceed the exemption amount. Even if your estate falls below the current exemption amount, your estate’s future growth or a lowering of the exemption amount in years to come may mean that your estate is subject to federal taxes. Some states have additional estate or inheritance taxes that must also be planned for. For those who are subject to estate taxes, or who may become so in the future, a properly designed estate plan can help prevent the family from paying more in taxes than necessary.
As an estate planning attorney, I am frequently asked by clients, “Why should I go through all of this when it will only matter to my kids?” I believe this question misses one of the most important aspects of estate planning. Part of the fear of death lies in the uncertainty that surrounds it. Estate planning can be a positive way to confront and reduce that uncertainty. When you go to sleep at night, there is never a guarantee you will wake in the morning, but if you have taken the time to prepare through the estate planning process, you can rest easy knowing that your family will be provided for.
Creative Planning Sports and Entertainment is a specialty practice of Creative Planning. Each of our dedicated teams specializes in working with athletes and entertainment professionals and includes an attorney, a CPA and a CERTIFIED FINANCIAL PLANNER™ practitioner. These professionals are also supported by Creative Planning Legal, one of the largest estate planning law firms in the country with attorneys licensed to practice in multiple states. Regardless of your specific situation, we are available to help you prepare a customized estate plan to meet your needs. If you’d like help beginning the estate planning process, or for any other financial matter, please schedule a call.