When a loved one passes away or becomes incapacitated, family and friends are understandably devastated and highly stressed in the immediate aftermath. There are hundreds of important details to attend to in such a time, but a personalized, comprehensive estate plan can preemptively handle many of those details and alleviate much of the stress that family and friends would otherwise suffer.
If a person dies or becomes incapacitated without a proper estate plan in place, many crucial decisions can be left up to the courts - disposition of money and property, medical decisions, dependent care, or the future of business assets owned by the deceased.
Even worse than courts deciding such important matters, those decisions can often turn into painful arguments between family members. Many people think they are too young, too healthy, or don't own enough assets to worry about estate planning, but an estate plan is much more than just a will. Here are ten reasons why every adult needs one:
Avoid costly probate: ensure that your assets get transferred to those you have identified, as quickly as possible, and without additional fees for attorneys, court costs, and appraisals.
Reduce estate taxes: with intelligent use of exemptions, life insurance, trusts, and gifts, you can potentially save a lot of money that would otherwise go to the IRS.
Protect beneficiaries: the better your estate plan, the less your beneficiaries will have to deal with uncertainty, public proceedings, and disagreements between each other.
Maintain your privacy: although wills eventually become public documents, it is possible to manage most of your assets through non-public instruments and protect your privacy.
Protect yourself if you become disabled: dictate the kinds of life-prolonging medical care you wish to receive, in case you are unable to make your wishes known when the time comes.
Keep your business running: the death or disability of a business owner can completely disrupt operations, but a good estate plan can provide for a smooth transition to keep the doors open.
Control your finances, even after you're gone: don't let the courts decide what happens to the things you've worked for.
Prevent fights between family members: fights in the aftermath of a death or disability can be devastating, but a thorough estate plan can remove the causes of potential arguments.
Catalog your assets: in the process of creating a comprehensive estate plan, you can complete the smart and useful step of recording an inventory of what you own.
Leave your affairs in trusted hands: instead of unknown probate lawyers, judges, and appraisers, you can ensure your affairs are handled by competent people whom you've chosen yourself.
So what does an "estate plan" look like? Each individual's estate plan will look a little different, but for almost everyone, a comprehensive plan will include the following things:
- A will, precisely worded to avoid confusion and properly executed to ensure it has legal validity.
- Any trusts necessary to protect assets, avoid probate, and reduce estate taxes.
- Advance medical directives to cover major medical decisions.
- Durable financial power of attorney.
- Healthcare power of attorney, to authorize specific people to make unforeseen decisions.
- Beneficiary forms to make bank accounts "payable on death" instead of part of the estate.
- End-of-life wishes and a funeral plan.
- Life insurance, if applicable.
- Business succession plan, if applicable.
- All related documentation collected, organized, and securely stored.
Estate planning is not just for the rich or elderly. Regardless of age, income, or health, everyone has people they want to protect, and principles and privacy they don't want to compromise. It is never too early to plan for the future, and thoughtful estate planning is a great way to prepare for the unexpected.