If you are reading this, you need an estate plan. Why? The short answer is that everyone age 18 and older needs an estate plan. It does not matter whether you are old or young, have built up considerable wealth, or are just entering adulthood—you need a written plan to control what happens to the things you own and to protect yourself and those you love.
Your estate consists of everything you own—including your car, home, bank accounts, investments, life insurance, furniture, and personal belongings. No matter the size of your estate, you cannot take it with you when you die, and you probably want certain people to receive certain things you own.
To ensure that your wishes are carried out, you must provide written instructions stating who will receive your assets and belongings, what you want them to receive, and when they will receive it—that is the essence of an estate plan. If you have young children, you must name someone to raise them in your place and manage their inheritance if both parents cannot.
A properly prepared estate plan will also contain instructions regarding your care (and the management of your assets) if you cannot manage your affairs (sometimes called incapacitated), even for a short time due to illness or injury. Without the proper tools, your family will have to ask the court to appoint someone to manage your finances and medical care and for permission to use your assets to care for you. When relying on the court to make these determinations, the process is outside your and your loved ones’ control, takes time, and can incur significant legal fees and costs, making an already stressful situation even more difficult for your loved ones. Depending on your family dynamic, this process can also be contentious if your family disagrees about who should manage your affairs or the proper course of action for your care. Not only does this infighting threaten family harmony, but it may also become a matter of public record, as most documents related to these types of proceedings will be available to anyone who requests them and pays a fee.
It might surprise you, but having a plan in place can often significantly impact and benefit families with modest means because they may be unable to afford the court costs and legal fees associated with the court process known as probate. Here is an example:
Sam and Meg had two young children together. Sam died in a car accident. Because he had no estate plan, the laws in his state divided his estate into thirds: one-third to Meg and one-third to each of their children. His estate included his one-half interest in their home, an inheritance from his grandfather (he was using this money to help support the family while looking for a higher-paying job), and a life insurance policy (but he failed to complete the beneficiary designation). Meg, a stay-at-home mom, was forced to go back to work after Sam’s death. The court set up conservatorships (in some states called guardianship or guardianship of the estate) for each child to manage their inheritances, which required ongoing court costs, including accounting, guardianship, and attorney’s fees. When the children turned 18, they each received what was left of their inheritances in one lump sum, and there was not enough to cover their first year of college tuition.
Do not try to create an estate plan without the assistance of a professional. An experienced estate planning attorney familiar with your state’s laws can guide you in making difficult decisions, such as who will raise your children and manage your affairs if you cannot. An experienced attorney will also know how to craft the appropriate estate planning tools to carry out your wishes.
If you are ready to take control of your life and the legacy you leave behind for your loved ones, Book a FREE Discovery Call. We make tough topics manageable to discuss. We can also craft a plan that addresses what you value most and protects you and those you care about.
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