Everyone has an “estate”. It is a common misconception that only rich people need to do estate planning; however, the degree of estate plannining needed will vary depending upon the value of your estate. Nevertheless, everyone should do some level of planning. Your estate is comprised of all that you own, which includes items such as your home or other real estate, bank accounts including investment accounts, life insurance policies and any personal possessions such as furniture, jewelry, clothing, artwork and the like. Bottom line, you can not take these possessions with you when you die.
Having an estate plan, allows you to control how your possessions are distributed upon your death, with the least amount of taxes and legal fees being paid from your estate.
In addition, you will want to be sure that your estate plan contains additional documentation that will direct as follows:
· Who will care for you should you become disabled or otherwise incapacitated prior to your death.
· Who will be responsible for the person or property of any minor children.
· What your wishes are regarding life support or other means of artificially prolonging your life.
Estate planning is an ongoing process. Your plan should be reviewed periodically and updated if there are changes to your family, financial situation or as state and federal laws change during your life.
It is never to early to begin estate planning. Although older people tend to think about estate planning more often that those just beginning on their journey, none of us has any idea what illnesses or accidents are in our future. It is never to early to begin the estate planning process. If you do not have an estate plan, the probate laws of the state where your death occurs will govern how things are to be accomplished upon your death and how your assests are to be distributed. Often times this means that a surving spouse may only be entitled to a portion of your estate, thereby complicating matters and resulting in an expensive resolution, involving lawyers and court fees.
Families with young children should definitely have a plan in place, despite their level of assets. Without an estate plan, the court could control a minor child’s inheritance. In the case of a simultaneous death where both parents die, such as a car accident, a court will appoint a guardian for any minor children. Most people would prefer to choose the person responsible to care for their children in such a tragedy rather than have the court appoint someone. An estate plan will allow you to make that choice!
If, prior to your death, you became disabled or otherwise incapacitated and your name is on the title to any assets, a court would need to appoint a guardian to sign on your behalf in the absence of an estate plan. A family member is not automatically granted that right. This can complicate matters, as well as become time consuming and costly.
An estate plan allows you to make these choices and not the court so that your final wishes can be upheld.