Do I Need Estate Planning?
By: Brad P. Scott, Attorney
As Benjamin Franklin once said, “in this world nothing can be said to be certain, except death and taxes.” Given these inevitable certainties of life, many people nevertheless still put off estate planning. From being too busy to deal with it today and thinking that you have plenty of time to take care of it some other day, the failure to timely plan for the inevitable can leave your family having to pick up the pieces if something does happen to you.
The fact remains, too many people simply do not plan for what will happen after they are gone.
Whether you are young or old, single or married, or wealthy or of modest means, you can benefit from even some basic estate planning. Consider these common possible situations:
- If you become disabled and are unable to manage your affairs, how and by whom will your assets be managed for your benefit during your lifetime;
- If you are unable to care for yourself, how and by whom will your personal and health care decisions be made during your lifetime;
- If you have minor children, how and by whom will your children be cared for in the event you pass away or die with your spouse in a common accident; and
- How and to whom will your assets be distributed after your death.
These are just the basic issues that your estate plan should cover. Other issues, such as financial, tax, and business planning should also be considered in connection with developing a solid estate plan. How extensive your planning becomes depends on the complexity of your estate and your individual financial and family circumstances.
If you do not have an estate plan, the default rules under state law will provide one for you but you probably will not like it. For example, if you become unable to manage your personal financial affairs due to mental or physical incapacity, without an estate plan in place, no one will be able to conduct your affairs for you and a court proceeding will be needed and a judge will appoint someone to make decisions on your behalf. The court, not your family, will control how your affairs are managed. This process can become expensive and time consuming, and your personal life will now be on display and documented in court records which are freely available to the public for review.
The same is true if you have minor children and you are a single parent, or married and you and your spouse die together in a car accident. Without advance estate planning, a court will determine who will take care of and raise your children without the benefit of knowing who you would have chosen. This could also gives rise to heated custody battles between family members who think they are the best alternative to now raise your children after you are gone.
Another issue is your assets. If you die without an estate plan, your assets will be distributed according to the default rules provided under state law. This often becomes a problem when someone remarries and has adult children from a prior marriage. Without an estate plan, your ownership in your current residence and bank accounts that you own jointly with your current spouse would become owned by your adult children of your prior marriage. In many instances this is not the result people want, and it creates problems for the surviving spouse who may be left co-owning property with step-children they do not get along with very well.
These are just a few of the many undesirable situations that could arise if you fail to plan ahead. It is important to realize that estate planning is an ongoing process and not a one-time event. Your plan should be reviewed and updated as your family and financial situations and the laws change over your lifetime. What does not change however, is that the best time to plan is now.
Although none of us want to think about our own mortality or the possibility of being unable to make decisions for ourselves, not planning is the reason so many families are caught off-guard and unprepared when incapacity or death strikes. Do not wait. You can put something in place now and change it later…which is exactly the way estate planning should be done.
Your estate plan can begin with a simple will, a durable power of attorney, and a health care power of attorney all of which do not have to be expensive. If you have a spouse or children that depend upon you, term life insurance should also be considered as part of your basic estate plan. Knowing that you have a properly prepared plan in place will give you and your family peace of mind. This is one of the most important things you can do for yourself and for those you love.
