The thought of one’s mortality can be fearful and depressing. Thinking about leaving your family behind is sad, but leaving your family behind without financial structure is irresponsible and completely avoidable. Yet, many individuals fail to address what needs to be done.
An estate plan is a set of documents that outline what you want to happen in the event of your death or inability to make your financial or medical decisions. Although the term “estate plan” may sound like it applies only to those who have a large amount of wealth, it really does apply to almost everyone, whether their situation is simple or complex. Consider that, in the absence of estate planning documents, your state of residency determines who gets your assets, and who takes care of your minor children.
In order to create a sense of urgency, the following list below are major reasons why you need to get your estate plan in order, and what will happen if you do not have the proper documents in place.
- Provide for your immediate family – Providing for your spouse and children is very rewarding; however, accidents happen in the blink of an eye with no warning. Wills with guardianship provisions are necessary to appoint the caregivers for children in the event of a simultaneous accident.
If you do not appoint a guardian, the courts will do it without your input, making decisions about your money and your children’s education and well-being.
- Choose the executor or trustee of your estate – Choosing the appropriate administrator of your estate, and giving them the appropriate amount of authority saves money, eases the burden on your survivors, and simplifies the overall administration of your estate.
Again, if you do not do this, the courts will make the decisions for you.
- Plan for incapacity – While many think this only applies with old age, you will need this if you ever get into a serious accident. The use of health care directives (i.e., living wills and health care powers of attorney) will help in the event of physical or mental incapacity. These documents enable you to decide in advance who will make decisions for your medical treatment, and the type of treatment you desire.
- Get property to your beneficiaries quickly – Options include joint tenancy titling of property or investment accounts, life insurance paid directly to your beneficiaries; or simplified and expedited settling of your estate that allows for partial payments to beneficiaries while a Will is being probated.
If you do not claim a beneficiary, the state of residency will make the decisions for you.
- Minimize expenses – Proper estate planning can keep the cost of transferring property to your beneficiaries as low as possible, leaving more of the assets to those you intend to benefit.
As you can see, having the proper documents in place ensure that your wishes are fulfilled, your family is provided for without placing a further burden on them, as well as avoiding the courts making decisions on your behalf.