Why do I need an estate plan? My family can handle it when I die!
July 13, 2018
This is a sentiment that I recently heard espoused from a rather close relative of mine (ahem, dad!) during a trip home to Oklahoma, and after some research learned this is not an uncommon view of estate planning for most people. Another commonly held misconception is that estate planning is only for the very wealthy. The truth however is if you have a house, cars, bank accounts, possessions that you care about, then you need an estate plan. Below are my top three reasons why everyone should have an estate plan.
If you are like me and my dad, AND most everyone else in the world, you want to make sure you have control over how your money and assets are being used. You can’t do this after you die (obviously), so you have to do it before! To prevent your money from being spent on attorney’s fees, court filings, appraisals, or being given to people you would not have chosen for it to go to, you need to create an estate plan. In California, attorneys must follow statutory guidelines which set a maximum they can charge for their services. These fees (which typically come from the estate) start at $4k for an estate valued at $100k, $13k for an estate valued at $500k and so on. It’s a lot of money to spend when the necessity of an attorney for your relatives can be prevented during your lifetime for a MUCH lower cost by effective estate planning.
Something I often think when I find myself or one of my kiddos is sick is “Ain’t nobody got time for that!” And the same is probably true for your friends and family. Let’s consider the average time it takes to complete an uncontested (everyone agrees) probate… anywhere from 6 months to a year or more! For a contested (disagreements between beneficiaries, debtors, etc.) probate, the case can take years to resolve. Do your relatives really have extra time to meet with attorneys and appraisers, attend court dates, or try to handle the entire probate on their own, the answer is probably not. And even more importantly this probably isn’t something you want them having to deal with on your behalf.
This is a big one. Think about everything you own. Maybe you have a house you love, or a collection you’ve been building your whole life, or maybe you’ve worked really hard and have many assets. Whatever your estate looks like it probably contains some items that mean a lot you. Well, the only sure way to make sure those things go to the people you want to receive them is to plan for it.
Just kidding, I have four reasons!
4. I’ve saved the most important for last… PEACE OF MIND! The above reasons are certainly important but deal heavily with monetary reasons and the division and distribution of assets. What we haven’t yet discussed is how estate planning allows you the ability to tell your friends and family what you want to happen should you become incapacitated or die. This can be a difficult conversation but one that should not be avoided. An effective estate plan allows you to choose who will make decisions (both financial and health related) on your behalf should you become incapacitated. It also allows you to make your wishes clear in regards to considerations such as whether or not you are an organ donor, what type if any of life-prolonging measures you want to receive, what type of memorial service you will have and so on. Making these decisions will not only give you peace of mind during your lifetime but also ensure that they are not left to relatives who may or may not know what you would want. The stress you can save yourself and your loved ones by completing an estate plan is worth the cost alone.
If you were on the fence about whether you are someone that needs an estate plan I hope the above considerations have helped you to understand that the answer is yes, everyone can benefit not only themselves but also their loved ones by creating an estate plan.
Hopefully you have more questions in regards to what an estate plan contains, how long it takes to create one, what kind of estate planning you need etc. And if you do have these questions, you’re in luck… this is just the beginning of a series of blog posts that will answer these questions and more!