No matter how large or small, nearly everyone has an “estate” which consists of everything you own: your car, home, other real estate, checking and savings accounts, investment accounts, retirement accounts, life insurance, annuities, furniture, personal possessions. In addition to all your “stuff”, one should also plan for their incapacity as well as appoint guardians for minor children.
A comprehensive estate plan should address the following issues:
Although initially planning for your estate requires taking a snapshot of a moment in time, estate planning should be an ongoing process and not a one-time event. As your family and financial circumstances change over time, you should review and update your plan accordingly.
Contrary to popular belief, estate planning is not just for retirees or the wealthy. Accidents and other life changing events beyond our control happen to people of all ages and means.
As a matter of fact, good estate planning is often more impactful for families with modest assets because the loss of time and funds as a result of poor estate planning is more detrimental.
For various reasons (and these are numerous), many people delay or simply never engage in any estate planning. Then when something happens to them, their families have to pick up the pieces. Although you will not be around to deal with the consequences, not having an estate plan in place creates additional, unnecessary stress on family and loved ones.
At disability: If your name is on the title of your assets and you cannot conduct business due to mental or physical incapacity, only someone appointed by a court can act on your behalf. The court will supervise and ultimately control how your assets are used for your care through a conservatorship or guardianship (depending on the term used in your state).
At your death: If you die without a valid estate plan, any assets owned in your individual name and without a beneficiary designation or other governing contract will be distributed according to your state’s intestacy laws. In many states, children will inherit some or all of your property even to the exclusion of a surviving spouse which is often times not the desired result. If you have minor children, the court will control their inheritance. If both parents die or become incapacitated in a common accident, the court will appoint a guardian without knowing whom you would have chosen.
Given the choice, wouldn’t you prefer that these matters be handled privately by your family, not by the courts? Wouldn’t you prefer to keep control of who receives what and when? And if you have young children, wouldn’t you prefer to have a say in who will raise them if you cannot?
Would your family know where to find your financial records, titles, and insurance policies if something happened to you? Planning your estate now will help you locate and organize your information and documents, as well as find and correct errors.
Most people do not give much thought to the wording they put on titles and beneficiary designations. You may have good intentions, but an innocent error can create problems for your family at your incapacity or death. Beneficiary designations are often out-of-date or otherwise invalid. Naming the wrong beneficiary on your tax-deferred plan can lead to devastating tax consequences. Correcting titles and beneficiary designations now can save time, attorney’s fees, and taxes for your family later.
It is important to understand that trying to do your own estate planning to save money now can cost your family more later and may have consequences that you did not intend. An experienced estate planning attorney will be able to provide critical guidance and peace of mind that your documents are prepared properly to meet your objectives.
None of us really like to think about our own mortality or the possibility of being unable to make decisions for ourselves. This is exactly why so many families are caught off-guard and unprepared when incapacity or death does strike. Don’t wait. You can put something in place now and change it later—which is exactly the way estate planning should be done.
Knowing you have a properly prepared plan in place—one that contains your instructions and will protect your family—will give you and your family peace of mind. Estate planning is one of the most thoughtful and considerate things you can do for your loved ones.