Estate planning is planning that protects yourself, your loved ones and your legacy in the event you become incapacitated during your lifetime and when you die. In the event of your mental incapacity, it is planning that puts you in control of who will manage your finances, provide for your family and make medical decisions for you (including end of life decisions). In the event of your death, it is planning that allows you to leave what you have, to whom you want, when you want, and the way you want.
Are a Lot of People Surprised by How Much They Have?
A lot of people believe that estate planning is just for the wealthy, not for them. When they hear the word “estate”, they have a vision of a large mansion sitting on well groomed grounds. But that isn’t the case when it comes to estate planning.
A lot of people tell me, “We can just keep it simple because we don’t have very much”. They feel that way because with their more modest lifestyles, they hardly view themselves as being among the wealthy of the world.
However, when we sit down and we add up the value of their house, the money that they have in bank accounts, their 401(k) at work and the amount of life insurance that their family would get if they died, all of a sudden, they look at the number and then look at me and say, “I can’t believe that I’m going to be leaving that much to my family. We do need to plan for that”.
Why Do People Need an Estate Plan?
Without an estate plan, you’ll leave everything to chance. If you become mentally incapacitated during your lifetime without having done any planning, the courts will ultimately be in control of who will have authority manage your finances and make heath care decisions for you. And the people that the court appoints may be very different that those you would have appointed had you proactively planned. And when you die, without any planning, you have no control over who will receive your property.
What Happens In Cases Where People Do Not Have an Estate Plan or a Will?
If you die without any planning at all, you still have a will. But it is not one that you write. It is one that the State of Missouri writes one for you and it is embodied in the State statutes. The “will” in the State statutes provides who gets your property if you didn’t leave your own will. And the “will” that the State writes for you may leave your property in a much different manner than you would leave it if you had proactively made those choices.
What Are the Benefits of Having a Proper Estate Plan?
The benefits are that you’re in control of everything. If you have young children, you are in control of who the guardian will be for your children if you die while they are minors. If you become mentally incapacitated, you’re in control of who will take charge of managing your assets, providing for your family, and making health care decisions for you.
If you’ve done the proper planning, then when you die, you solely determine who will be the beneficiaries of your estate and the manner in which they will receive it.
Why Do You Think People Avoid Making an Estate Plan?
I think there are a number of reasons for this. First, death is an unpleasant subject for many people to deal with. And when the subject is a person’s own death, even when they know planning is important, it is easy to put off because they don’t want to have to deal with the subject now.
Other people put off estate planning because they think they have plenty of time to get it done. People think “maybe something is going to happen to my next door neighbor tomorrow, but nothing is going to happen to me in the near term”. So they keep using their busy lives as an excuse to put it off thinking that they will get the planning down when things calm down a little and they have some time.
And often, particularly with younger people, they haven’t yet recognized their own mortality. So even those that have a particularly great need to plan, e.g. younger couples with small children, they’re just not thinking that they might die.
Who Are the Necessary Parties Involved in an Estate Plan?
The parties necessary for proper estate planning are the person or persons for whom the planning is being done and their estate planning attorney.
However, it is often valuable for other professionals to be involved. These are people who know our clients, people who our clients trust and people who are aware of our clients’ personal and financial circumstances. These would typically be people like their CPA, financial advisor or insurance professional.
This article was originally published by Steve Spewak on EstatePlanMO.com. It is republished here with permission.