When we first begin working with clients, it’s very common to discover that they don’t have a Will or any estate planning documents at all. It’s not that they don’t think it’s important, but often times they just don’t know where to start or what to do.
If you happen to be one of those people, then don’t fret. Today I will be guiding you on the importance of getting your estate planning in order and why only having a Will can actually be dangerous.
WHY IS ESTATE PLANNING SO IMPORTANT?
You may think that you don’t have enough assets to do any estate planning. However, it really has nothing to do with asset size. If proper estate planning is not done, regardless of how wealthy you are, then a whole host of problems could present themselves.
First, you will cause your heirs to spend a lot of time and energy dealing with attorneys and courts. And of course this would result in a lot of money spent, which means your heirs are not receiving as much of their inheritance.
Second, you could actually disinherit certain people that you didn’t intend to.
Third, it could take years for your heirs to actually inherit the assets even if they are the rightful owner.
So far, I’ve discussed the problems that could happen if you pass away, but estate planning doesn’t just deal with death. It also deals with your incapacity.
If you haven’t chosen the right people to care for you in the event of an incapacity, then the courts will do this for you! They may not choose a person that you approve of. And if that wasn’t enough, this person would also have to appear before the courts on an annual basis to give an accountability of how they cared for you. The courts could even deny how funds are used on your behalf. And of course all this court involvement costs money! This can all be avoided with a little planning upfront.
DO YOU NEED MORE THAN A WILL?
Often times people think of estate planning as just having a Will. And even if you don’t have a Will, you actually do have one because your State creates one for you. There are statutory laws that specify how your assets are to be distributed in the event that you don’t create your own Will. Suffice it to say, that the State’s wishes may not be your wishes.
But, there is more to estate planning that just a Will. As mentioned above, if you become incapacitated, a Will alone is not going to help you because the Will only becomes effective at death. To protect against these types of situations, you’ll likely want to have a Living Trust and Powers of Attorney.
DANGERS OF ONLY HAVING A WILL
If you only have a Will, then there are some dangers you should be aware of.
1. A Will guarantees that your heirs will go through probate.
Probate is simply the process by which assets are passed on to heirs, but it is generally something that you want to avoid as probate can be:
– Very Expensive – heirs could pay as much as 6% or more of the value of the assets.
– Time Consuming – probate takes at least 6 months and in many cases one year or more. This means that it may take quite a long time for your heirs to receive their inheritance.
2. A Will is a fully public document.
According to Laiderman Law Firm, “Both during and after probate, sensitive financial information and personal matters that were well-guarded during life will be readily available to curiosity seekers and those seeking a business advantage”. Bottom line is if you desire privacy, then having a Will alone will not accomplish that goal!
3. A Will does not protect you if you become incapacitated.
As mentioned above, estate planning doesn’t just deal with death it also deals with incapacity. But a Will alone will not help you with this.
For the reasons listed above, we generally recommend that people have more than just a Will. For many people this includes having a Revocable Living Trust, Financial Power of Attorney, Healthcare Power of Attorney, and a Living Will.
With the proper estate planning and documents in place, you can ensure that your assets avoid the expensive and time consuming aspects of probate, your matters are kept private, you are protected during incapacity, and your assets are properly passed on to who you wish, when you wish, and how you wish.
Hopefully this article has encouraged you to get your estate planning in order if not yet done. If so, I recommend that you talk to an attorney. Or, feel free to set up an Introductory Meeting with us where we can start the process of guiding you with your estate, financial, and investment planning.
Do you have any experiences that hurt you because proper estate planning was not done? Please share any thoughts, comments, or questions below.
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