An estate plan gives you the opportunity to proactively manage your individual asset base if an accident, illness, or other event should leave you incapacitated or deceased.
With proper estate planning, you can provide clear instructions for managing and distributing your assets and liabilities, and ensure your decisions are carried out. A few key components of estate planning include selecting who will receive your assets, as well as who will be responsible for paying any outstanding debts and settling any estate taxes.
Most people turn to an attorney who has experience in estate law to ensure they have done everything correctly, to make important estate plan updates, and to provide counsel if needed.
Common Misconceptions About Estate Planning
Who needs an estate plan? Some people may feel like they are too young or don’t have sufficient assets to make estate planning worthwhile.
The real question isn’t who needs estate planning. Instead, the better question is what kind of estate planning do you need?
Basically, if you are an adult and living on your own, you need to have a plan in place in the event an unfortunate incident leaves you incapacitated or deceased. Life happens, so it is important to be prepared, meet with an estate planner and have a conversation with your family to discuss exactly what you want to happen in the case of such events.
What Typically Happens When People Don’t Develop an Estate Plan?
One of the biggest drawbacks to not developing an estate plan while you’re healthy and of sound mind is that you remove your own agency. In this case, the court may determine how to distribute your assets, or worse, your entire estate can go to the state.
Following are a few possible outcomes if you die without developing an estate plan:
- Intestate Succession. Intestacy laws vary by state, but they generally cover common ground. If you die without a prepared and notarized will for your estate, a court will distribute your assets according to the laws in your state.
- Heirs-at-Law. An heir-at-law is anyone entitled to inherit assets from someone who has died without having prepared a last will and testament. People who fall under this title are most often surviving spouses and children.
- Probate Proceedings. Often a process undertaken by a relative or family friend of the deceased person, a probate proceeding intends to identify the deceased person’s property and their proper heirs. Additionally, the court oversees the process of identifying debts before distributing property to the identified heirs.
- Guardianship or Conservatorship. The purpose of a conservatorship or guardianship is to establish the legal authority for one person to care for another, in terms of their estate or physical care, if that person becomes incapacitated.
Again, the downside of any of these outcomes is that you lose the opportunity to make decisions about how your assets will be distributed. Someone else will make these important decisions for you, and your loved ones may not receive what you wanted them to have. Even worse, your loved ones may have to pay hefty fees in probate proceedings to resolve these matters.
Getting Started with Estate Planning
Getting started with estate planning is often the hardest part for people. Most people do not want to consider death or incapacitation due to illness or injury. But understanding the value of preparing for such a scenario can make doing so easier.
Start by taking a good look at your assets and liabilities. Follow up by talking to your family about estate planning and where they fit into the mix, as far as any duties you would like for them to take on in your absence, mentally or physically. Finally, contact a wealth management company, like our experienced team at Caldwell Trust Company, that can help you focus on your interests and provide the best outcome for your loved ones.