You may have dealt with a death in your family or you are close to someone that dealt with an intimate death in your life. And while death may be the number one reason you start looking at your own mortality, reviewing your estate planning should happen every time there is a milestone in your life, if not regularly once per year.
- A Birth
- A Death
- A Divorce
- A Marriage
- The purchase or selling of real estate or a business
- Probate laws may have changed
Why should I even do any estate planning? Often I hear, “I have life insurance at work that takes care of everything” or “I don’t have any money to do need to do planning.” If you could say that, you need estate planning. Some of the most important reasons to get a Last Will and Testament or a Trust, a Power of Attorney, and/or a Living Will include:
- Nominating a Guardian for Your Children: Most of our work involves the family, like divorce, paternity actions, grandparent visitation, and guardianships. We routinely see the worst of what happens when a parent with young children dies or goes to jail. Although making this decision might be a difficult choice to make, if you are having trouble deciding, just imagine what it would be like for a court to decide. Sometimes a decision (especially one that you can change) is better than no decision. Planning for these contingencies is so critical. We have all heard stories about unexpected deaths and children being left in foster care. If you don’t decide, and something happens to you, DCS could get involved and choose the most convenient caretaker regardless of what may be best for your children. And even if the family member you wanted eventually gets custody of those children, they shouldn’t have had to pay an attorney to fight the system to satisfy your final wishes.
- Mitigate Family Disharmony: Making no decisions regarding what you want to happen to your assets can lead to family disharmony and friction. By taking the time to deal with potential issues now, you may be able to mitigate or eliminate family friction down the road. For instance, business owners who do not have all children involved in the business should sit down and plan out how assets will be divided so that it can be as equitable as possible. If a business owner doesn’t plan appropriately, children who have worked alongside mom or dad in making the business a success may suddenly find themselves sharing the business with siblings who shouldn’t or didn’t want to be involved in the business. Who gets Mom’s wedding ring? Who gets dad’s car he was rebuilding? How are family pictures being distributed among children when that parent has remarried? Will a step-parent inadvertently cause friction by not distributing memorabilia until the step-parent passes?
- Deal with Incapacity Issues, Serious Illness, and Accidents: Getting in place a power of attorney and health care proxy along with other estate planning documents will help your loved ones care for you in case you ever become incapacitated. If you don’t have an estate plan in place, your loved ones may need to go to court and obtain a guardianship if you are incapacitated – this, like probate, can be very lengthy and expensive, and could have been easily avoided by getting a power of attorney and/or health care proxy in place.
Two examples recently that could have been avoided with proper planning: a man called to get guardianship over his mother who has Alzheimer’s. His father had been taking care of her for years but had a heart attack. The father’s will, having been drawn up 20-30 years ago, left everything to his wife but she was not in any state to handle the affairs of the estate let alone her own. This created a need for an emergency guardianship, multiple hearings, and a lot of work. What could have been fixed for a few hundred dollars took a few thousand.
Another involved a 19 year old who was at IU, had a car accident and was incapacitated in the hospital by medical inducement into a coma. Due to HIPAA laws, and the child now being an adult, his parents were not allowed to make any medical decisions for him, or even know about his prognosis, because no medical power of attorney existed. No one expects their 19 year old son to be injured in a car accident but the risk exists… plus, parents who are paying for the kids’ college educations should get a power of attorney just to learn how their child’s grades are progressing. The schools never seem to have a problem taking a tuition payment but they are barred from giving you their grades without a Power of Attorney on file with the school.
- Probate Avoidance: With no estate plan, your family and loved ones may need to go through the probate process, a process which can be very lengthy and expensive. It has been our experience that those who have to deal with the probate process really wish that they hadn’t had to do that because of the delay, stress, and expense of going through probate. A proper estate plan can help ensure that your loved ones won’t have to go through probate.
- Make Sure Your Hard Earned Money Works for You and Flow to Those You Want: With no estate plan, your assets may not go to the people you want your assets going. This is something we try to educate insurance agents to understand. Without a proper estate plan, if you were to pass with minor children, and you are not married, your ex may gain control of all of the funds AND even if it were kept safeguarded, those children are given those funds on their 18th birthdays. When you were 18 years old, would you have wisely spent $50,000? How about $250,000? Do you think your children would? A trust can place restrictions on when that money can be accessed and how much can be withdrawn at one time. If you want your assets to pass to a non-family member, you need an estate plan to help ensure that assets pass to whom you want.