Estate planning is about much more than just avoiding probate. Or reducing taxes. Or creating a legacy.
Planning for the future means planning for yourself, those you love and the things that are important to you.
It means planning for your incapacity, as well as, your passing. It means planning to keep your affairs private. And,
contrary to popular belief, you don’t need to have significant wealth to have an estate plan.
Everyone needs a comprehensive estate plan which addresses both life events and death.
Before reviewing 10 common reasons to conduct estate planning, and why everyone needs an estate plan, let’s first review some of the reasons why someone does not create an estate plan.
Your estate plan will give the person you want the authority to make decisions on your behalf, if you suffer a debilitating injury or illness that leaves you unable to make or voice decisions for yourself, whether those decisions
involve your personal and health care matters or your financial affairs. With no plan, your loved ones may be forced to endure a potentially time-consuming and expensive court process in order to have a judge appoint a guardian or conservator
to make decisions for you.
If you have a loved one with special needs who receives assistance or benefits through government programs, you probably know how important those needs-based programs are, and therefore how important maintaining eligibility is. Your estate
plan can help you leave part of your wealth to your loved one with special needs, but structure it in a way that it does not interfere with your loved one’s continued qualifications for benefits and assistance. Without an estate plan,
your loved one might be forced to make the choice between losing his/her eligibility for continued benefits or renouncing the receipt of anything from your estate.
Everyone already has an estate plan. Either you have the one you created yourself or you have the one your state’s government created (probably many decades ago) and enshrined in your state’s statutes. Whether you have non-relatives you wish
to remember in your estate, or a family member that you have decided to disinherit, or you just desire to have the control that comes with directing your legacy in a hands-on manner, creating your own plan allows you to customize your
legacy and have the maximum level of control.
Lots of families today look very different from the “Ozzie and Harriet” model of the 1950s. However, many state laws have not caught up with the world of the modern family. With an estate plan, you can customize your affairs to ensure that
your estate will both provide for your current spouse and your children from a previous marriage. Without an estate plan, you could end creating a situation where someone could get an amount you did not desire, or could get unintentionally
Undoubtedly, caring for your children is one of the most important duties in your life. Part of making sure that you have provided for your children involves making sure that their needs are met if something happens to you. With an estate
plan, you can inform the courts who you want to care for your children in the event that you (and/or your spouse) is unable to do so. With no plan, the judge must simply make her own determination about what is in the best interest of
your children, with no input from you.
Many businesses, especially small ones, fail to survive past the first generation. Several of the these businesses fail due to a lack of planning. In your estate plan, you can deploy many tools to ensure your business goes on after you die.
You can transfer your ownership interest to the person you believe is best equipped to carry on the business’s activities, whether that involves a direct distribution through your will or living trust, or the use of other tools (such as
life insurance) to give a trusted partner or employee the option of purchasing an ownership stake in the business. A carefully crafted estate plan may also help your family minimize or avoid entirely a potentially devastating estate tax
bill. With no plan, a lack of a clear succession or debilitating bills could prove fatal to your business’s survival.
The process of administering a probate estate can be expensive and extremely time-consuming. The estate plan administrator is responsible for assimilating all of the assets, completing an inventory and appraisal of the estate’s assets, paying
the debts and distributing the inheritances. In some cases, this can take many months or years and cost a significant sum of money. An estate plan with a properly funded living trust can allow your family to avoid the probate process completely.
Some states have very short and simple probate processes, and a carefully crafted estate plan that properly uses non-probate transfer tools can help you ensure that you qualify for these simplified procedures, if you choose that path.
In many situations, probate estates are matters of public record. Anyone can view the details of your estate simply by traveling to the court clerk’s office and requesting your file. As examples, consider how many details the news media were
able to acquire and publish, almost immediately, regarding the estates of stars like Robin Williams, Philip Seymour Hoffman and Whitney Houston. An estate plan with a properly funded revocable living trust may help your family avoid this
potential pitfall and ensure privacy. The process of trust settlement, unlike probate administration, is not a public matter. This added layer of privacy can be enormously valuable when it comes to protecting your loved ones from financial
If you are in a relationship that is (whether by personal choice or the limitations of the law) not recognized by the law, you have a particularly strong need for an estate plan. In most places, your non-spouse partner not only would receive
nothing from you financially under the laws of intestacy, he or she also would be completely frozen out of making any decisions should you become incapacitated. This could result in your partner being forced to leave the home you share
and possibly not even being allowed to visit you in the hospital. Your estate plan, with powers of attorney alongside a will and/or living trust, can avoid these nightmare scenarios by placing your goals of protecting your partner’s place
in your life, in addition to his/her financial well-being, into valid and enforceable legal documents.
As mentioned previously, you already have a plan. Either you have the estate plan you laid out, or the one the state has laid out for you in the intestacy statutes. Whether your financial affairs, family situations
or privacy needs are straightforward or extremely complex, if you’re like most people, you’d prefer to have the satisfaction that comes from knowing that the legacy you ultimately leave behind for your loved ones is exactly the one you
wanted to create.