The average person probably thinks estate planning is only for the very wealthy, but that is a common mistake. People at all income levels need estate plans to protect what they have worked for all the years of their lives.
What is an estate?
The word estate brings to mind something most of us only see in movies, but in real life it is all the property you own at the time of your death. This includes a house, hay meadows, pastures, cropland, livestock, bank accounts, stocks and securities, life insurance policies, cars, pickups, tractors, and equipment.
“Planning your estate will get the right property to the right people at the right time,” said Jordan Gottlieb, a New York Life agent and speaker at the upcoming Cattle U & Trade Show, Aug. 4 and 5, in Dodge City, Kansas.
No matter the total on the bank statement and balance sheet, what is owned is worth protecting.
A promise with proper planning
Death is never easy for those left behind and estate planning can ease that worry for them.
“Estate planning makes your wishes known,” Gottlieb said.
The stock trailer might have been promised to the neighbor who helped care for the herd when the rancher was sick. But did he or she tell anyone in the family about that promise? Is there a written record of it? An estate plan will clear up any confusion and possibly head off hurt feelings before they start.
If there are children under the age of 18, a guardian needs to be named who can guide them until they are of legal age.
If those children are special needs and require full-time care, money can be made available to fund that care without additional financial strain.
Death and taxes*
Taxes are the second certainty in life and there isn’t much that can stop them. Even those who don’t consider themselves wealthy can find the tax collectors to be a persistent lot after a death in the family.
Having a plan in place can help reduce the dent taxes make in what’s left after death. An estate plan, prepared with qualified legal counsel, can minimize, or eliminate the impact estate tax will have on those who remain. Federal taxes could be due at the time of death and usually only give family nine months to pay them.
Documents that can help
Estate planning involves many numbers but there are some important documents to have signed and ready as well.
There isn’t just one Power of Attorney document that covers all the bases. Being familiar with the different types and what they do is helpful.
• A Durable General Power of Attorney document allows you, the principal, to appoint another person, or agent, to handle your affairs if you are unable. This type of Power of Attorney can be tailored to fit the situation, granting as little or as much power as the principal desires.
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• A Health Care Power of Attorney allows the person of your choice to make health decisions for you if you are unable. Being unable can include but is not limited to dementia, Alzheimer’s disease, or coma.
• A living will is definitely different than a will, Gottlieb said. A living will provides instructions to medical personnel and loved ones if a person is in a vegetative state or unable to clearly communicate their wishes. Living wills let caregivers know how far they should go to save a life should the necessity arise.
• A traditional will involves how to distribute assets upon a person’s death.
• Buy-sell agreements may be better known in relation to the stock market, but they are also necessary when a business of any size is involved. These agreements outline the wishes of the business owner should they become incapacitated or deceased. Those wishes should include appointing someone in charge of managing that business and the daily happenings.
Taking the time to start the estate planning process may seem impossible to find right now but farmers and ranchers need to decide if it is worth the money they could save and the money their families and business partners could keep if something happens to them in the future.
*This article is for your general informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
Jennifer Theurer can be reached at 620-227-1858 or [email protected].