11 Reasons You Need to Create an Estate Plan

Many people think estate plans are only for the very wealthy seeking tax benefits, or they delay creating one because they feel too young. Others don’t see the importance of an estate plan or find the topic too morbid. However, as the following points illustrate, comprehensive estate planning is crucial for everyone, regardless of age or net worth.

1. You Could Lose Capacity

A comprehensive estate plan not only addresses what happens when you pass away, but it includes provisions for times of temporary or permanent incapacity while you are living. What if you become incompetent and unable to manage your own affairs? Without a comprehensive plan in place, your loved ones might have to sue you for adult guardianship, and the courts will then select someone to take on the role of your guardian.

No one expects to face a serious accident or illness, but it can happen to anyone at any point in their lifetime. Ensure you have entrusted someone in your life to serve in your best interests if you can no longer communicate your own wishes.

2. You Have Minor Children

If you have minor children, who will raise them if you were to pass away suddenly? Without a plan, a court will make that decision. Creating a comprehensive estate plan means being able to nominate the guardian of your choice.

Additionally, without a plan, your children may face unnecessary burdens. For example, assuming an adult child will protect a younger sibling is not always reliable.

3. Choosing Between a Will or a Trust

If you die without a comprehensive plan in place, your assets pass to your heirs according to your state’s laws of intestacy. Your family members (and perhaps not the ones you would choose) will receive your assets without the benefit of your direction.

Yet, how do you know which estate planning tool will accomplish your planning goals? Is a traditional Last Will and Testament sufficient? Do you need to investigate a Revocable Living Trust? Are there reasons to put an Irrevocable Living Trust in place?

Avoiding intestacy is of utmost importance, but choosing the right estate planning tool for your unique situation is of equal importance.

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4. You Are Part of a Blended Family

According to lovetoknow.com, “40% of families in the U.S are blended with at least one partner having a child from a previous relationship or marriage.”

A comprehensive estate plan can prevent accidental disinheritance and ensure fair treatment for all children. By planning ahead, you have the opportunity to determine what goes to your current spouse and to any children from a prior relationship.

5. You Have a Child with Special Needs

For a child with a serious disability, planning for their future care and maintaining their eligibility for public assistance programs is crucial. Consider setting up a special needs trust to manage their inheritance without affecting their benefits. With a special needs trust, you’ll also need to appoint a trustee. Be sure to work with a professional who has experience with special needs planning.

6. You Want to Keep Assets in the Family

Without an estate plan, your assets could go to your child’s spouse if your child dies or divorces. Ensure your assets stay within your family by having a comprehensive estate plan.

7. You Have Retirement Accounts

Do you have an individual retirement account (IRA) or similar retirement savings account? Simple beneficiary designations are better than nothing, but keep in mind that these designated beneficiaries may change throughout your lifetime. You may welcome grandchildren along the way, or have a falling out with a family member, for example.

Crafting a comprehensive estate plan can help you plan for life’s uncertainties and avoid the need to constantly update beneficiary designations.

9. You Own a Business

If you own a business, even a small business, you should work with an estate planning attorney to develop a succession plan as part of your estate plan. For example, failing to name a successor puts your family at risk of losing control of the business. Take time to decide who will own and control the business after you. Put strategies in place that will help your successors flourish.

10. You Want to Avoid Probate Court

Probate is the court process your estate could face after your passing. Probate can be costly and time-consuming, making your assets public record. A comprehensive plan can help avoid probate, saving your heirs time, money, and stress. Without a plan, your estate may encounter delays and excess fees (depending on the state).

11. You Have a Beloved Pet

Your dog, cat, horse, or other companion pet may mean the world to you. Should you no longer be able to care for them, you might assume your family members would take on this responsibility.

Unfortunately, this is often not the case; your loved ones may not have the money or the inclination to do so. With a comprehensive plan in place, you can include a clause in your will specifying your pet’s future needs and caretaker as well as explore options funding like a pet trust.

Work With an Estate Planning Attorney

Whether you haven’t yet started your estate plan or need to review and update it,  contact our office for guidance.