Why Everyone Should Have an Estate Plan

People who have estate plans in place enjoy the peace of mind that comes from knowing important matters have been taken care of. Many people avoid estate planning because it involves thinking about end-of-life issues, but putting these tasks off can have dire consequences. Passing away without an estate plan in place can lead to lengthy probate proceedings, higher tax bills and bitter disputes between heirs. If you want to make this difficult time less burdensome on your loved ones, you should address estate-planning matters sooner rather than later.

What Is an Estate Plan?

Most people think that creating an estate plan involves little more than writing a last will and testament. A will is often the most important document in an estate plan, but it is rarely the only one. If you want to create an estate plan that will meet your needs and the needs of your loved ones, it should include:

• A will: A last will and testament describes how an individual would like their property to be distributed after they pass away. Wills must be validated during the probate process, and the estate’s priority debts must be settled before assets are distributed to heirs.

• Trusts: Trusts are included in estate plans for several reasons. Some people use them to avoid the public and sometimes costly probate process. Others choose to include trusts in their estate plans to protect their assets from creditors or to ensure that their beneficiaries continue to qualify for government programs like Medicare.

• Beneficiary designations: The funds from life insurance policies and retirement accounts are paid to the beneficiaries listed on the account paperwork regardless of what the will says, so it is a good idea to check these designations on a regular basis.

• A durable power of attorney: This document is drafted by individuals who want to appoint a trusted person to handle their financial affairs and act on their behalf if they become incapacitated by illness or injury.

• A health care directive: A health care power of attorney or health care directive gives a trusted person the authority to make decisions about what kind of health care an incapacitated individual will receive and when that treatment should stop.

• Guardianship designations: Estate plans give parents an opportunity to name guardians for their children. When the wishes of parents are not clear, guardianship decisions are made by judges.

• Detailed instructions and a contact list: A comprehensive estate plan will also include a document that provides the contact details of key individuals like the decedent’s attorney, accountant and executor or trustee along with a list of estate-planning documents and their locations.

Why You Should Estate Plan

Even young and vigorous people can be diagnosed with serious illnesses or badly injured in accidents, so drafting a durable power of attorney and health care directive are tasks that should not be put off. Other reasons not to neglect estate-planning matters include: 

• Avoid probate: Placing assets in trusts can speed up the probate process or avoid it altogether. These proceedings take place in open court, and they can become contentious if the will is challenged.

• Avoid will contests: If your will is drafted by an experienced attorney, you can be confident that it will meet the requirements laid down by state law.

• Make your wishes clear: Wills and trusts give individuals an opportunity to decide how their assets will be distributed after they pass away. When there is no will or trust, assets are distributed according to state intestacy laws.

• Control how assets are distributed: Inheriting a large sum of money can do more harm than good if the beneficiary has drug or alcohol problems or has acted irresponsibly in the past. Drafting trusts allows individuals to determine when and how their assets will be distributed. Trusts can also include distribution triggers like reaching a certain age, maintaining sobriety for a set period of time, getting married or graduating college.

What It All Entails for Your Property 

Putting an estate plan into place will facilitate the smooth transfer of your assets after you pass away, and it could also uncover problems that you don't know about but require your attention. When attorneys work with their clients to create estate plans, they check documents like property deeds, automobile titles, insurance policies and financial accounts. This work sometimes leads to problems like liens or defects being discovered that would otherwise have gone unnoticed.

Who Can Help You With Estate Planning?

Tax accountants, financial planners and retirement specialists could all help you to create a comprehensive estate plan, but the most important member of your team should be an attorney with experience in this area. An attorney could make sure that your will, trusts and powers of attorney are properly drafted and meet legal requirements, and they may also help you to avoid some common estate-planning mistakes.

Written by Taylor McKnight, Author for Law Office of Stanton D. Goldberg