Why Estate Planning Matters

Top Ten Reasons To Create An Estate Plan

As estate planning attorneys, one of the biggest mistakes we see clients make is waiting too long to create an estate plan. Some people avoid estate planning because they prefer not to look at the inevitable. Some incorrectly believe that they are not wealthy enough to need an estate plan. Others simply do not understand the benefits an estate plan can offer. We wrote this list of top ten reasons to create an estate plan to address some misconceptions and explain some benefits you may be overlooking.

Blended Families

Is your family the result of multiple marriages? Without an estate plan in place, children from different marriages may not be treated as you might wish. In fact, it is possible that your children could be barred from inheriting everything you have intended. With an estate plan, you are able to make decisions about what goes to your current spouse, to your children from a prior marriage, and to other family and friends.

Taxes

There are many planning opportunities which can minimize both income and estate taxes that may be payable when you die. With the help of an estate planning attorney you may be able to save your estate and your heirs a significant chunk of change.

Incapacity and finances

What if you become mentally incapacitated and are unable to manage your own financial affairs? Without an estate plan the courts will select the person to manage things for you. That person may have control over your bank accounts and other financial resources. With an estate plan you are able to select the person you most trust to have access to, and authority over your assets.

Avoiding Probate

Most estates that do not have an estate plan in place will be forced to go through the probate process after your death. Probate can be costly and can take years to complete. Often the cost of the probate process is significantly more than the cost of having an attorney draft a proper estate plan. With a well-drafted estate plan you and your family can actually avoid the probate process entirely, saving both time and money in the long run.

Medical Decisions

What if you become physically injured and are unable to make your own health care decisions? Would you want someone to “pull the plug” or keep you alive? Without an estate plan, the medical staff caring for you or a person designated by law will make that determination. By creating an estate plan, you can make those determinations on your own, before you become unable.

Dying Instate

Dying intestate means dying without a will. If you do not have a will, your assets pass to your heirs according to state laws of intestacy and your family members may not receive the assets that you intended. Including a will in your estate plan enables you to decide who gets your assets, as well as when and how they receive them.

Minor Children

Many of my estate planning clients still have minor children or minor grandchildren. Who will raise your children if you die? If you don’t have an estate plan, a court will make that decision without knowing your wishes. Additionally, if you have assets that will be inherited by a minor child, it is a good idea to consider how old you would like your child to be before he or she has complete control over the inheritance. Can you imagine what you would have bought with $50,000 when you were sixteen? An estate plan enables you to nominate whomever you feel would be the best person to raise your children and it also allows you to decide who should control your child or grandchild’s inheritance until they are mature enough to handle the assets responsibly.

Retirement Accounts

You probably have an IRA, 401K, or similar retirement account. If you designated beneficiaries for those retirement accounts before considering an estate plan, they might not continue to reflect your current wishes. The designations may also result in unintended tax consequences. In creating an estate plan you can consider these beneficiary designations as part of the entire plan, evaluating them in light all of your decisions.

Business Ownership

Do you own a business? If you do own a business but do not have an estate plan, your family could lose control of your business when you die. When creating an estate plan you can consider the future direction of the business, including who might be best suited to continue running the business once you are unable. Additionally, you can review how to get the most money out of the business to provide for your heirs once you are gone.

Children with Special Needs

Special care is needed in estate planning if you are the parent, guardian, or other interested family member of a person with special needs. Without any planning, that person risks being disqualified from receiving Medicaid or SSI benefits, and may have to use his or her inheritance to pay for care. In creating an estate plan, you can set up special trusts that will allow that person to remain eligible for government benefits while only using inheritance to pay for expenses not otherwise covered by governmental benefits.