Q: Why do I need an estate plan?
A: Some reasons to consider having a professional prepare a will or trust for you include:
Avoid Family Conflict. The death of a loved one is an extremely stressful and emotional time. Unfortunately, the process of administering a decedent’s financial affairs can exacerbate underlying tensions, or even create problems where none seemed to exist before. Even relatively small and simple estates can benefit from the clarity that an estate plan provides. Leaving clear and considered instructions can alleviate a lot of stress and complications, allowing your loved ones to focus on grieving their loss.
Make sure your wishes are respected. If you do not prepare an estate plan, under law your assets will pass in equal shares to your children. Although this may be the preferred outcome, there are a number of situations that can complicate it, such as disinheritance, blended families, second marriages, and confusion over who should manage and administer the estate.
Avoid mistakes or misunderstandings. There are many misconceptions about estate planning. Assumptions about the law or DIY solutions often lead to litigation or probate outcomes that do not reflect the wishes of the decedent. Attempting to save a few hundred dollars on estate planning costs can spawn litigation that runs in the tens of thousands of dollars, delays probate of the estate for years, and permanently damages relationships between family members.
Minimize Costs and Delays—Even a simple, uncontested probate can cost a few thousand dollars and delay administration of an estate for several months. If minimizing future costs and streamlining administration are important to you, a well crafted estate plan (usually utilizing a trust) can avoid probate and allow your heirs and beneficiaries to quickly and efficiently administer your estate.
Care for Minor Children—The care of minor children is often the most important issue for our estate planning clients. Even a relatively simple plan will allow you to nominate a guardian and, if necessary, a conservator for your children (a guardian will raise the children; a conservator manages their money until they come of age). More advanced estate planning tools, like trusts, allow you to safeguard your children’s financial future with an even greater degree of care.
Answer questions about health care. No estate planning portfolio is complete without an advanced medical directive (living will). This document allows you to choose someone to make medical decisions on your behalf if you are unable to do so. It also gives you the option of giving general or specific instructions about end of life care. Although this can be a difficult topic to think about, your family will appreciate the clarity you provide for them if they end up facing difficult decisions regarding your medical care.
Provide important information. Although not legally required, putting together an estate plan is a convenient time and place to collect and store important information, like bank account numbers, passwords, and a list of your assets. This ensures that, upon your death, your spouse or children will know where to go, and how to take care of your estate.