When you plan a family vacation there is definitely some time and effort spent in organizing this anticipated fun-filled event. In the weeks prior to the vacation, the air is filled with excitement and happiness of what is expected to come. Every detail of the pre-planning is combed over and over to make sure your family’s experience is a safe one with no glitches or complications. This same tireless effort that goes into planning a vacation should also go into estate planning for your family.
The focal point of vacation planning and estate planning is the same – your family. Just like during a vacation where we want our families to be protected with no hassle and delay, we can also achieve this same type of protection for our families during our life and after we pass away. The way to achieve this protection for our families is to make estate planning a priority.
Should estate planning be only for those reaching retirement? No, estate planning is for anyone over the age of majority. In most states, this means anyone over the age of 18. Getting the appropriate documents in place to coordinate whom will make your decisions during incapacity or at death; and to whom your estate will be distributed.
The following are 10 reasons why it is important to plan today, and even why young adults should consider estate planning.
1. Estate Planning is only for the wealthy. The word “estate” includes cash, life insurance, retirement accounts, real property and personal property. Since an estate can add up quickly it’s important that you leave written instructions for what to do with your assets in case you can no longer control them, and also when you pass away.
2. Estate Planning is not just about death. Planning involves making sure someone will be in charge of your estate if you can no longer make your decisions while you are still alive. Do any of us know if we will become incapacitated? If you have a crystal ball, you would know the answer, but this is not realistic. It’s important to have the necessary documents in place should you become incapacitated.
3. Planning necessary for 18+ year olds. A common misconception is that young adults 18 and over will automatically have their parents be in control over their health and financial decisions should they be unable to do so. Once a young adult reaches age 18, they are considered an adult and will need at a minimum necessary estate planning documents in order to avoid a possibility of both a living and death probate.
4. Estate Planning helps mitigate taxes and expenses. Estate planning is similar to health insurance, auto insurance and homeowner’s insurance. Planning for your death or disability will give you and your family similar protection.
5. Probate can be costly. Depending upon the size of your estate, your family may have to go through a probate after you pass away. On average, the probate cost can be up to approximately 7% of the value of your estate. The probate process can last up to 2 years in the court system; with assets frozen and tied up until completion. Probate can and should be avoided.
6. Control of your estate lost. Without proper planning – the doctors will not know if they should keep you alive artificially or not; your assets will go according to state law; and your assets are frozen until someone is officially court appointed to handle your estate.
7. If you have minor children, who will care for them? Without leaving any instructions, you will also leave this decision to the state. If you are married, the responsibility goes to your spouse. But what happens if there is a simultaneous death? What if you are a single parent? What if you are divorced and don’t trust your ex?
- Should a pot of money go to a beneficiary at age 18? Without an estate plan, any money given to a beneficiary under age 18 will have to go through a court process called a conservatorship. A conservatorship is costly and can cause delay. On the flip side, once the beneficiary turns 18, they will have the authority to do whatever they wish with the “new funds.” Are they mature enough? Will they waste their inheritance on senseless purchases?
- The law doesn’t care if you are married. Your spouse doesn’t have automatic authority to make health or financial decisions for you if you are incapacitated. You must have the appropriate documents giving your spouse this necessary authority while you are alive.
- Peace of Mind. Since you don’t know when tragedy will strike, a plan must be in place to take care of what will unexpectedly be before your family at an emotional time.
About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.