Taxes and death; both will happen. Preparing for the end of life is something we know we should do, but have we actually done it? According to a survey from caring.com, most of us haven’t – only 3 in 10 Americans have a will or living trust. So be one of the few and not one of the many. Following are five reasons why everybody needs an estate plan.
Provide for your loved ones
An estate plan can ensure your assets get where they need to be so your loved ones have the resources they need. If you have minor children, all 50 states have laws that require a guardian or conservator to be appointed to oversee the minor’s needs and finances until they become a legal adult. You want to be the one making this decision, not the state.
An estate plan can help you avoid probate. Probate is a slow and expensive option that will ultimately reduce the amount of assets that your loved ones receive. Probate will also make your financial assets a matter of public record.
Minimize family disputes
An estate plan can help reduce fighting among your family because you will have made your wishes clearly known in writing. There may be certain items or assets that carry potential for conflict that written instructions can help alleviate. You may have specific wishes about burial, or cremation or whether you want to be an organ donor. You may own a family business and have specific wishes about succession. Make these intentions clear.
Protect your assets
Once you know, or even just suspect, that a lawsuit is on the horizon, it’s too late to put a plan in place to protect your assets. Imagine your son is the cause of an auto accident. Insurance was insufficient to cover associated medical costs and you are now a defendant being sued for more. An estate plan won’t eliminate that risk, but may be able to minimize the exposure of your assets.
Protect yourself in case you become disabled
From the caring.com survey, 29% of respondents say they had not addressed estate planning because “they don’t have enough assets to leave to anyone.” Estate planning is about more than your assets. If your cognitive abilities decline and leave you unable to make financial and medical decisions for yourself, who will make these decisions for you? A comprehensive estate plan will include documents appointing trusted decision-makers for these tasks. This may not eliminate disputes, but can put final decision-making authority in hands that you trust with your best interests at heart.
Estate planning can be a complex and emotional process. It is more than just a will, but addresses many more related issues. Too often the matter is set aside because the topic of death is unpleasant. But consider the gift to your loved ones of you having answered so many questions in advance. Questions they may not be mentally prepared or legally allowed to answer as they begin to navigate life in your absence. Take the time to do it right.