The Top 10 Reasons Why You Need An Estate Plan
A recent survey found that approximately two-thirds of Americans don’t have a wills, and even fewer have power of attorneys or health care directives. Are you one of them?
The survey suggests that the primary reasons why so few have Wills include:
- Believing that getting a Will was not urgent
- Thinking they did not need a Will
- Not wanting to think about dying
There are even fewer Americans with comprehensive estate plans, which include powers of attorney appointing someone to handle their financial affairs or make medical decisions for them if they become incapacitated.
Burying our heads in the sand
As unpleasant as it is to consider, all of us will one day die, and some of us may become incapacitated. We have the choice of either ignoring this inevitability, or accepting it and taking the steps necessary to protect our loved ones and ourselves.
Estate planning can help you make the legal arrangements necessary to protect your family, plan for your personal and health care, and manage or transfer assets in the event of your incapacity or death.
The benefits of estate planning
Without estate planning, you forfeit the opportunity to make many important decisions, such as:
- Deciding who will receive your assets when you die. Without a will, your assets will be distributed according to a statutory formula, which may conflict with your wishes. For example, you may want a dear friend or sibling to share in your estate, or leave a larger portion of your estate to provide for a special needs child. That would not be possible without a will.
- Deciding who should serve as guardians for your minor children if you are your spouse both die. You know your children better than anyone else, and are the best person to choose a guardian for them. However without guidance from you, that decision will be left in the hands of a judge.
- Designating a guardian for your children in the event you are incapacitated but have not died. Without any guidance from you, a judge who doesn’t know you or your kids will make that decision for you.
- Deciding how your assets will be distributed to you minor children when you die. Direct bequests to your minor children of more than a nominal amount of money may require a probate court to appoint a guardian of the estate to oversee management of it. This is typically an expensive and cumbersome process that can be easily avoided with proper estate planning.
- Deciding who will manage the assets you leave behind for your children. If you have not named someone to manage the assets you leave behind, a judge who doesn’t know anything about your financial values will make that decision for you.
- Deciding when your children will have access to the assets you leave them. If a guardianship is created, your children will have access to the assets when they become adults. Imagine what you would have done with $10,000, $100,000 or more when you were 18. Most likely, you would not have had the skill or foresight to manage it wisely. With estate planning, you decide how and when the assets you leave are distributed to your children.
- Deciding whether to authorize a trusted friend or family member to engage in specified business, financial or legal transactions on your behalf if you are unable to manage your own affairs, such as if you become incapacitated.
- Deciding whether to authorize a trusted friend or family member to make medical decisions for you if you are incapacitated and unable to made those decisions for yourself.
- Deciding whether to authorize a trusted friend or family member to receive access to protected health care information. If a medical power of attorney does not specifically authorize transmission of your protected health information as required under HIPAA, your health care provider may err on the side of caution and refuse to share this information with your agent, who may need it to make an informed medical decision on your behalf.
- Deciding whether you would like your physicians to use artificial methods to extend your life in the event you are diagnosed with a terminal or irreversible condition.
If you want control over these important decisions, you need an estate plan.