Have you thought about what might happen if you suddenly died? Don’t feel alone if you haven’t, most of us never give it a thought until we have to deal with the death of someone close to us…..and their estate. People die every day. There is no reason it can’t be me in that next car accident, or you.
It is easy to procrastinate, but don’t. Here are 5 reasons to start estate planning today, even if you are young.
Your dependents need a guardian.
If you have dependents, you really should have a will – simply to specify who will become the guardian for your dependents. Without this simple document, a judge in court could appoint whoever he or she saw fit – including someone your children don’t even know! As far as I know, a will is the only way you can designate your own guardian.
This legal document has different rules in each state, but basically consists of the name of your executor and what you are empowering himto do; who will be the guardian for your dependents; and may specify who gets your stuff.
A will must be witnessed in most states. You can have an estate planning lawyer draw up a will for you, as I did. Alternately, you can choose to use one of the many types of forms to draw up your own will. However, remember that you have to get it right. It has to be legal in your state and be stated so that it will hold up in court. You don’t get a second chance after you die.
When you die, the will must be submitted to court in order for your estate to be settled, unless you take other measures.
You should have a say in your final treatments.
If you have strong preferences about what you do and don’t want as far as final health care, you should draw up both a health care proxy and a living will. A health care proxy will designate someone who can make health care decisions for you if you are not able to do so. A living will specifies the things you do and do not want done. Some people want every life saving measure possible, others list out specific things they do not want while still others write general classifications of treatments that are allowable.
These too can be drawn up by a lawyer, or you can find books or web sites with templates to use as a base.
You want certain belongings to go to certain people.
My Mom requested that I pass down certain pieces of jewelry through her female descendants. Since I had two boys, I had to wait for a granddaughter to have a chance to do this. I wrote a letter and put it with my estate plan documents, saying that my granddaughters alive at the time of my death will split that jewelry. Alternately, you could add a list at the end of your will, as an attachment, specifying who gets what.
Remember that things, not money, are what cause the most conflict in dividing up an estate.
Your dependents/loved ones need access to your assets.
Most of us aren’t rich, but we still have expenses related to death. A funeral costs money and your survivors will need access to funds to get yours done.
The IRS comes knocking at their door as well. If you have been diligent about contributing to your IRA, your heirs can get a double whammy – income tax on the required distributions from your retirement plan and (if your money has really grown), inclusion in your total estate amount might push it above the limit to avoid estate taxes.
Careful planning can also help you avoid unnecessary taxation on other fronts.
Your estate should be your business, not a public record.
If your estate has to go through probate court, a listing of all assets in the estate is part of the procedure most places. The list is open to public access.
Probate can take awhile and cost some money as well as being publicly visible. My Mom and Dad learned that it is a real pain to go through probate court proceedings. After experiencing it, they put their assets in a trust, to avoid the need for court and public statements of their assets. When they died, the successor trustee (my brother) had immediate access and legal rights to distribute the estate assets under trust in the manner the trust specified. No waiting for the courts.
After Dad died, Mom made things even simpler. She put transfer on death clauses on many of her belongings and investments, including her home and her car. When you do this the beneficiary doesn’t even need a trustee or executor to gain access to the asset.
Hopefully I’ve inspired you to put estate planning at the front of your to-do list. If you get it done, good for you, but don’t stop there. It won’t do much good to develop all those lovely plans unless you let people know you have them and where they are! Talk to your potential survivors! Let them see the documents, discuss them with those old enough to understand. Make sure they know where you store the plan.
With which part of the plan will you start?