Many people think that “estate planning” is something that only your rich uncle needs to do, but the reality is that everyone needs to have a plan for what might happen to their personal belongings if the worst were to happen. Regardless of your age or personal financial situation, it’s advisable to create an estate plan right now, and here’s why.
1: You Never Know What Will Happen
We would all like to think that we are going to live long and happy lives, and for most people that is fortunately true. Unfortunately, though, things can happen, and not just in the form of an unexpected and untimely death. Sometimes people become incapacitated and are unable to manage their own personal affairs. Other times people might suffer from medical issues that require loved ones to manage a person’s estate. In other cases it might be the untimely death of a spouse or sibling.
The common thread in all these situations is that without a plan in place, it will be left up to the courts to decide who will manage your affairs, and in most cases the courts have no idea who or what you would have wanted. With a proper estate plan you can choose the person to execute your wishes through power of attorney, and outline a plan for that person to follow.
2: Designate Care of Minor Children
If you have minor children, you owe it to them to create an estate plan. When parents die without a legally-binding plan in place, the courts will determine who raises your children—and it might not be the person you would have picked if you had the chance. This is also particularly important if you are part of a blended family or have children with special needs, as these things can complicate legal proceedings if your wishes are not known. Rather than taking a chance, take a little time to nominate a guardian and communicate that through an estate plan.
3: Avoid Probate and Specify Inheritance
Dying without a will leaves the decision of what to do with your assets up to the state. After a person passes on, the courts will determine whether that person’s will is valid through a process called probate. If the will is valid, the assets will be divided according to the wishes of the deceased. In the absence of a will, though, the probate process might include making all your assets public record; inventorying and appraising the property; paying fees, debts, and taxes; and distributing the property according to the dictates of the court. If you would rather avoid this, having a clearly defined estate plan can help prevent unnecessary lawyers, delays, and fees during probate.
Estate plans have a lot of benefits, not the least of which is providing a measure of financial security and peace of mind to your family. It doesn’t take a lot of time, and nobody wants to plan for the worst, but it can make a big difference to have an estate plan in place in case something happens.