Having an estate plan is extremely important, yet the majority of American adults don’t even have a simple will. Some 39 percent of adult men feel like having an estate plan is simply not necessary, while 26 percent of women believe it is too costly. Those who consider themselves Republicans are more likely to have an estate plan (46 percent of all registered Republicans do have some type of estate plan), while only 37 percent of Democrats have an estate plan. Almost a full third of Americans would rather give up sex for a month, do their taxes or get a root canal than to engage in estate planning. Aside from feeling an estate plan is either not necessary or too expensive, other common reasons given for not having an estate plan include:
- It’s just too complicated;
- It’s too time-consuming, and
- My spouse and/or children will automatically receive my assets
In fact, engaging in estate planning is neither complicated, time-consuming, nor especially expensive, and remember that the cost will certainly pail when you consider the alternatives. If you have decided to engage in estate planning, consider the following “checklist.”
- Start with a will. A will allows you to clearly state who the guardian for your minor children will be, and who will inherit your assets.
- Consider adding a trust. A trust will prevent your beneficiaries from having to go through probate for your most important assets, which can be a lengthy and expensive process. Further, the contents of a trust are private, while those of a will, which will be probated, are not.
- Next, think about health care directives. If you are suddenly unable to make medical decisions for yourself, a health care directive, also known as a living will, will give another person, chosen by you, the authority to make those decisions on your behalf.
- A financial power of attorney—or durable power of attorney for your finances—names a person you trust to handle your finances should you become incapacitated.
- If you have minor children, you will want to name an adult who will manage money and property inherited by your children will need to be named if there are children under the age of 18 to consider. Some people will name the same person to manage the finances as the person chosen to be guardian to the children.
- Create beneficiary forms for your retirement plan and bank accounts which are “payable on death.” This means that on your death, these plans and accounts will not be required to go through probate, rather will go directly to the named beneficiary.
- Add life insurance information into your estate plan, so the beneficiaries are clearly stated.
- Estate taxes will not be an issue for you unless your taxable estate is worth more than $5.45 million. If, however your estate is worth that much or more, it may be subject to significant estate taxes.
- While some people prepay their funeral expenses, you may choose to set up a special account at your bank, known as a payable on death account.
- Have a plan for succession if you have a business.
- Make sure all your estate planning documents are locatable by those who will need them.
Far too many people believe estate plans are only for the very rich. Nothing could be further from the truth. An “estate” is nothing more than the things you own—your assets. It is wise to speak to an experienced estate planning attorney in order to ensure your assets will be left to those you choose, your children will have the guardian you choose, and if you become incapacitated, your wishes will still be followed.
To learn more about creating an estate plan, contact us today!