Posted by: The Life and Legacy Planning Group
Believe it or not, you have an estate. In fact, nearly everyone does. Your estate is comprised of everything you own— your car, home, other real estate, checking and savings accounts, investments, life insurance, furniture, personal possessions. No matter how large or how modest, everyone has an estate and something else in common—you can’t take it with you when you die.
When that happens—and it is a “when” and not an “if”—you probably want to control how those things are given to the people or organizations you care most about. To ensure that your wishes are carried out, you need to provide instructions stating
whom you want to receive something of yours,
what you want them to receive, and
when they are to receive it.
You will, of course, want this to happen with the least amount paid in taxes, legal fees, and court costs.
That is estate planning—making a plan in advance and naming whom you want to receive the things you own after you die.
However, good estate planning is much more than that. It should also:
- Include instructions for passing your values (religion, education, hard work, etc.) in addition to your valuables.
- Include instructions for your care if you become disabled before you die.
- Name a guardian and an inheritance manager for minor children.
- Provide for family members with special needs without disrupting government benefits.
- Provide for loved ones who might be irresponsible with money or who may need future protection from creditors or divorce.
- Include life insurance to provide for your family at your death, disability income insurance to replace your income if you cannot work due to illness or injury, and long-term care insurance to help pay for your care in case of an extended illness or injury.
- Provide for the transfer of your business at your retirement, disability, or death.
- Minimize taxes, court costs, and unnecessary legal fees.
- Be an ongoing process, not a one-time event. Your plan should be reviewed and updated as your family and financial situations (and laws) change over your lifetime.
Can I Write My Own Will? Do I really Need a Lawyer to do my Estate Planning?
Writing your own estate plan can be a complicated endeavor. An inexperienced person will find it quite difficult to do.
There are many reasons why you should hire an attorney to create your estate plan.
- You Will Probably Need More Than Just A ‘simple’ Will. An Estate Plan is overall plan, possibly comprised of several documents, ensuring the following of your wishes concerning the distribution of your assets and the administration of your estate after your death. A Will is only one component of the Estate Plan.A Will won’t cover all of your assets, although many people think that it disposes of the whole estate. Anything that’s in joint name or payable to a named beneficiary, such as life insurance policies or 401(k) balances, is outside the scope of a Will.While a DIY Will may be better than nothing (but can also be worse in some situations), a professionally drafted document can do far more to protect your heirs — particularly if the beneficiaries you would choose aren’t those that are provided for by your state’s intestacy law.Some things are best left to the experts.
- Saves You Money, Time, and Energy. You will find that writing your own estate plan is more time- and thought-consuming than anticipated. It turns your attention from the more important things in life, like family or work. Hiring a lawyer to write your estate plan might cost you initially, but it could cost you more if you decide to prepare it ‘go it alone’.If you don’t think you can afford a complex estate plan now, start with what you can afford. For a young family or single adult, that may mean a Will, term life insurance, and Powers of Attorney for your finances and health care decisions. It might even cost less than you’d imagine.Estate planning attorneys are experts in the process of preparing estate plans and familiar with the ‘ins and outs’ involved, but hiring an attorney to prepare your estate plan can also save time.Saving time = saving money.
- It is More Complicated Than You Might Think. If you don’t fully understand what you’re doing, estate planning can be quite taxing. Every phrase counts; every word counts; in fact, everything you write counts and may be misinterpreted if not correctly drafted.Not to mention that the law itself is changing all the time, and key agencies like the federal government, the IRS, and courts are changing the laws all the time.It’s the lawyer’s job to know about these changes, and it is a full-time job to keep track of all the laws and rules that are being changed.
- Efficiency. If you do finish your own estate plan only to realize that it is not adequate, you can go ahead and hire a lawyer to do it for you. But think of all the time, energy, and resources that you’ve already invested.Estate planning is a complicated process, always changing. It’s not ‘once and done’.Spend some time and a little money preparing an estate plan initially, and then let your planning develop and expand as your needs change and your financial situation improves. Don’t try to do this yourself to save money. An experienced attorney will be able to provide critical guidance and peace of mind that your documents are prepared properly.
- Objectivity. Lawyers bring not only expertise to the table, they bring objectivity. A lawyer can give you a clean, unbiased view of your current situation and give you a fair and honest assessment of what you should do. Family dynamics and other issues that you may be blind to, or that you may try to resolve inequitably, may backfire and cause litigation or family discord, potentially for multiple generations.By drafting an unfair estate plan, you could single-handedly upset your entire family’s relationships.
“Do I even need an estate plan?”
Well, of course it’s your prerogative to NOT engage in establishing an estate plan at all. However, even If you don’t have a plan, your state has one for you (but you probably won’t like it.)
At disability: If your name is on the title of your assets and you can’t conduct business due to mental or physical incapacity, only a court appointee can sign for you. The court, not your family, will control how your assets are used to care for you through a guardianship. It can become expensive and time consuming, it is open to the public, and it can be difficult to end even if you recover.
At your death: If you die without an intentional estate plan, your assets will be distributed according to the probate laws in your state. In many states, if you are married and have children, your spouse and children will each receive a share. That means your spouse could receive only a fraction of your estate, which may not be enough to live on. If you have minor children, the court will control their inheritance. If both parents die (i.e., in a car accident), the court will appoint a guardian without knowing whom you would have chosen.
Given the choice—and you do have the choice—wouldn’t you prefer these matters be handled privately by your family, not by the courts? Wouldn’t you prefer to keep control of who receives what and when? And, if you have young children, wouldn’t you prefer to have a say in who will raise them if you can’t?
The best time to plan your estate is now.
None of us really likes to think about our own mortality or the possibility of being unable to make decisions for ourselves. This is exactly why so many families are caught off-guard and unprepared when incapacity or death does strike. Don’t wait. You can put something in place now and change it later . . . which is exactly the way estate planning should be done.
The best benefit is peace of mind.
Knowing that you have a properly prepared plan in place – one that contains your instructions and will protect your family – will give you and your family peace of mind. This is one of the most thoughtful and considerate things you can do for yourself and for those you love.
Estate planning is for everyone.
It is not just for “retired” people, although people do tend to think about it more as they get older. Unfortunately, we can’t successfully predict how long we will live, and illness and accidents happen to people of all ages.
Estate planning is not just for “the wealthy,” either, although people who have built some wealth do often think more about how to preserve it. Good estate planning often means more to families with modest assets, because they can afford to lose the least.
Paying a bit more now for good, legally drafted estate planning documents can also save your heirs money — particularly if they are not the beneficiaries designated by your state intestacy statutes. If your surviving family or friends are not the designated beneficiaries, they may have to spend thousands (or hundreds of thousands) of dollars fighting for what they are entitled to.
You may like the idea of do-it-yourself legal documents because they don’t cost a lot of money. But this decision can lead to a very costly ‘bargain’ and could cost far more than any attorney will ever charge to draft an estate plan for you.