Why Does an Estate Plan Matter?
You probably know you should have an estate plan. But maybe you’re wondering why it matters? Here’s helpful information to know. (And yes, it does matter…a lot!)
According to a recent survey by caring.com, nearly 2/3 of Americans don’t have an estate plan. Maybe you’re one of them? Probably you already have been told you need an estate plan, but you’re not sure why. There are many good reasons, and we’ll list some of them here.
Of course if decide not to do your estate planning, it doesn’t really matter what reason you use. One excuse is as good as another. Failing to do an estate plan is only going to hurt you (if you become incapacitated and no one knows your wishes and the Court system takes over), or your loved ones (if you fail to plan and leave a mess that results in extra time, expense, red tape, head aches, and legal controversy).
Here are some very good reasons to have the right Will and Powers of Attorney in place, and to plan your estate.
Some very famous people have died without an estate plan. Maybe you don’t have as much money as Prince did, but he died without a Will and as a result no one knew who was supposed to get his estate. Unfortunately, estate disputes happen even over small estate. When you prepare your Will you get to name the person you trust to settle your estate and deal with the beneficiaries. You also get to instruct how your estate will be divided.
Who will be your beneficiary if you don’t have a Will? You may be very surprised. For example, in North Carolina if a spouse dies and the couple has no children, then the deceased’s estate will be divided between the surviving spouse and the deceased’s parents. No one but an estate planning lawyer would have expected that. Your spouse is going to wish you’d made a Will to avoid that problem. Or if you’re the surviving spouse, you’ll wish you’d both had Wills made.
Another unfortunate surprise under the State’s estate plan (which is the one that applies if you don’t make one for yourself) is that step-children receive nothing. And step-children of your children, who you consider your own grandchildren also would not be considered to be your descendants unless you expressly say so under your Will.
Death and incapacity happen
Maybe you think estate planning is just for “old people.” You’re young and healthy, and you’re more concerned about building an estate than how it will pass upon your death. Unfortunately, people die unexpectedly, whether from a car accident or other tragedy, illness, or disease. And, all too often people are in accidents or have an illness or disease that they survive but then they can’t make their own decisions either temporarily or permanently. That is called incapacity.
The problem with saying that you’ll do your estate planning “later” is that “later” may be too late. Tomorrow may never come. Procrastination is the single biggest problem preventing proper estate planning. Dying is a certainty. We say that people should “plan for the unexpected.” But what we’re really saying is to “plan for the unexpected timing.”
Think about estate planning just like planning a plane trip to visit friens. What happens if you show up at the airport without a ticket? Chances are, you won’t get the flight you want. That’s not the result you want for yourself or the people you care about. By planning ahead and getting the right ticket, things are likely to go much better.
It’s all about family
Your estate plan is the way you help your family and show your love for them. For example, a married couple with minor children needs to know that in case they both died in a common accident, that their children will have a good start in life with relatives or friends who care about them. In addition, the parents can arrange to have the right people managing the child’s inheritance and avoid the inheritance being blown through court costs while the child is a minor, or the child getting a lump sum at age 18 and making poor financial decisions.
What if your children are older, and you can see that one of them can’t manage money, or one of them is going through a divorce. Or perhaps you have an adult child with special needs, who receives government financial assistance. In those situations and others, you need to incorporate trust-based planning, to better protect your child’s inheritance.
When you think about this, what it all boils down to is that you need to do an estate plan as an act of love and responsibility to benefit those you love most. Period.
If you’ve already planned your estate, congratulations you should feel good about that. If you haven’t yet done so, what are you waiting for?