Many of the Los Angeles County residents who come to see us here at the law offices of Alice A. Salvo have worked hard their entire lives to be able to offer some bit of an estate to their children. What many don’t understand is that even if one has a prepared a will and named beneficiaries, it is possible that the expenses of both life and death can end up depleting the assets to one’s estate before they’re ever able to be distributed. In this post, we’ll examine exactly how estate depletion occurs, and what, if anything, can be done to avoid it.
Few may realize this, but it actually can cost quite a bit to die. Medical bills, caretaker expenses, and funeral costs, not to mention any outstanding debts accrued by the deceased can end up leaving family and friends owing a small fortune. Most may assume that life insurance will cover these expenses. Yet there are two problems with that assumption: first, a 2013 Harris Interactive Study conducted for InsuranceQuotes.com showed that nearly 40 percent of American adults don’t have life insurance. Second, there’s likely a significant number beyond that who have it, but not enough to cover the aforementioned expenses. In such an event, funds are pulled directly from the estate to cover these expenses before any thought is given to dispersing them to heirs.
The way to avoid this depletion from happening is two-fold:
- Work directly with a life insurance agent to ensure enough coverage to cover both planned and unintended expenses
- Establish a separate trust into which the money meant for heirs is placed
For more information on securing an estate from depletion, please visit our Living Trust page.