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Financial Planning Insights from Bob Dockendorff JD, LL.M



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If You Have Kids or Own A House, Get An Estate Plan

Estate plans aren’t usually at the top of mind for young, busy families. But leaving your affairs to the state in the event of an untimely death can cause stress for your spouse and children. Also, you might reduce taxes with an estate plan.

What’s an Estate?

It’s all the money and property that own individually or with others. 

What’s an Estate Plan?

It’s a plan that describes what happens to your estate after you’re gone. Who gets all your money, real estate, etc.? For most folks, the estate plan is in place for an unexpected or sudden death.

It also determines who can make decisions about healthcare if you’re incapacitated. 

Additionally, it dictates who takes custody of minor children in the event that both parents pass away in a tragic accident. 

Lastly, if you have a taxable estate, you can create a structure that will reduce taxes. 

What If I Don’t Have an Estate Plan?

The State distributes your property. A probate judge will distribute your assets per the probate laws of the state. With the state government in charge, you can imagine how this works. It’s long, burdensome, and based solely on marriage and blood-family relationships. The property generally doesn’t pass how you would have wanted. Also, it goes to probate court for administration. It’s a bumpy process with insufficient results…just avoid it.

Your healthcare decisions are severely limited. Without someone in charge, health professionals lack clear guidance about your wishes and there is risk of unwanted procedures and fighting among family members about the best course of action. In a time where your medical condition is so dire, the healthcare directive can only helpWhen healthcare news becomes grim, the last thing a family needs is fighting amongst each other or expensive unnecessary treatment. Give your family the instructions to provide for your wishes.

Your minor children go into temporary state custody. Guardianship of minor children is really where it hits home for people that aren’t concerned about their property or healthcare issues. Imagine the situation where you and your wife are in an awful car accident and you both die (fun blog post!). If you don’t have a guardianship arrangement in place, the court will name the guardian—but this takes some time. The scary part is that there will be a period where your children are in the custody of the state. Not with their grandparents, or aunts and uncles, but THE STATE. This is not an ideal situation, but one that is easily avoided by simply naming who you want to be the guardian of your children.

Again, a simple estate plan that can solve all these issues and will likely cost less than a full day’s work of your time, and perhaps a few thousand dollars depending on complexity. There’s even a new online estate planning company that will do it for far less. While I can’t vouch for them, I would assume it’s better than nothing. 

But What About Estate Taxes?

When you die, the federal government takes upwards of 40% of your estate—commonly referred to as the “Death tax”. They won’t touch the (approximately) first $11 million for individuals or $22 million for married couples—they grant an “exemption” for those amounts.

With such a high exemption you can imagine that only the super wealthy have to worry about the federal estate tax.

There are, however, state death taxes as well. The state exemptions are much smaller, and in Massachusetts—folks that pass with more than $1 million estate owe a tax. 

In both cases, federal and state, there are plenty of planning opportunities to reduce the estate tax and maximize the amount of property that is left to heirs and beneficiaries.

This is a little more complex and expensive, but very doable.

An Analogy

An estate plan is almost like an emergency escape plan. You’re better having it and not needing it than needing it and not having it. Much like an escape plan forces you to scrutinize all potential exits, discuss how to reconvene with loved ones, but most importantly confront the reality of an awful situation ahead of time to be better prepared.

Why Wouldn't You Have One?

In speaking with many families that are without an estate plan, there’s really no valid argument against having one. It’s mostly a function of convenience and simply “getting around to it.”

This year, if you have kids or a house, get an estate plan.

About the Author

Robert E. Dockendorff, JD, LL.M

Robert E. Dockendorff, JD, LL.M

Robert Dockendorff is a Vice President of Claro Advisors, LLC. Bob serves as an Advisor at Claro, where he helps clients achieve financial goals through careful analysis and the development of long-term plans that encourage consistent, achievable actions. Bob also enjoys sharing helpful financial planning insights on his blog and is an active contributor on Investopedia's Advisor Insights website.

Prior to joining Claro, Bob was a Senior Associate Financial Counselor at The Colony Group, supporting a team of financial counselors with research and analysis on all areas of wealth management and financial planning for high net worth individuals. He also focused on the implementation of investment, estate, and tax planning tailored to the specific goals of diverse clients. Prior to joining The Colony Group, Bob worked as a Tax Associate at the international accounting firm Ernst & Young, where he conducted tax research for multi-national businesses. Bob received a Bachelor of Arts in Philosophy from the University of Vermont. After college, Bob earned a Juris Doctor from Suffolk University Law School, Cum Laude, and an LL.M in Taxation from Boston University Law School. Bob has previously passed the FINRA Series 65 and the MA Life and Health Insurance Producer Exam. In his spare time, Bob enjoys the mountains, the beach, and playing golf. Bob resides in Hingham, MA with his wife Caitlin and two sons, Charlie and Tommy.

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