Getting power of attorney or updating your will are not, I know, always the top items on your to-do list. But I look at having an estate plan like having car insurance: you don’t expect to use it, but you wouldn’t drive without it. Here’s five reasons you should get an estate plan today:
1. Estate planning saves money.
Estate planning is not free- and any lawyer worth hiring is going to charge hundreds or thousands of dollars, depending on the complexity of the plan. But proper estate planning costs a lot less than not having an estate plan at all. With no health care power of attorney, your family may end up in court fighting over your medical care. With no durable power of attorney for finances, your family may have to go to court to get a guardianship over you. With no will and living trust, your family will have to probate your estate, which may cost upwards of $10,000 in court fees, attorney costs, and other administrative costs, and which rarely takes less than a year. Planning is money well spent.
2. It’s more powerful.
If you leave a will, power of attorney, and other documents as part of a comprehensive estate plan, you can maintain control. You pick who manages your assets and what they have the power to do. A plan you make yourself is always going to have more authority and more flexibility than the alternative, which is going to court for a guardianship or appointment as administrator of the estate.
This is especially true because the laws don’t keep up with changes in our lifestyles. Most states, for example, do not have laws on the books allowing fiduciaries access to your digital assets. This is a lot more problematic than it sounds- if you have a lot of photos on your Facebook account, for example, a person appointed by the court to administer your estate may not be able to get access to your photos because you did not leave anything stating outright that you wanted that person to have access to your photos. Photos of your life might be lost forever because you didn’t have a well-drafted will.
3. It’s personalized.
If you don’t have a will, the state has written one for you. The laws that govern the distribution of your property if you don’t have a will, called “intestacy” statutes, are your state legislature’s guess of how most people would want their property to be distributed.
These statutes often have not been updated to take modern lifestyles into account- they do not protect long-term partnerships that are not formalized as marriage, they do not include stepchildren or friends, and there is a very good chance they don’t reflect what you want.
Just look at the recent death of Prince- during his lifetime, he financially supported many causes. After his death, because his property will be distributed according to state law, to his siblings, those charities may have lost a benefactor. We have no way of knowing if that’s what Prince would have wanted- and that’s the point. No matter what he wanted, his estate is going to be distributed according to Minnesota’s intestacy laws (and, perhaps, settlements from estate litigation between his relatives).
4. The Unexpected Happens
It’s the unpleasant truth: people die or are hurt every day. Car accidents, unexpected illnesses. It’s so easy to think that these things only happen to other people, but someone has to be that other person. Someone has to be the person who’s in the car accident or who’s diagnosed with a serious illness. As I said above, I consider having an estate plan to be the same as having insurance. No one wants to use it, but having it is absolutely invaluable: when you need it, none of the alternatives will do.
5. It’s the kindest thing you can do for your loved ones.
Imagine that you have just lost a loved one. A parent, perhaps, or a spouse. You are grieving, in shock, and you have to find the strength and the concentration to deal with the financial aftermath.
What would you want that process to look like? Would you like it to be short, private, and affordable, or would you like it to take a minimum of 8-12 months, be public, involve the probate court, and cost thousands of dollars in court and legal fees?
It’s not a hard choice, is it?
Losing a loved one or going through a serious illness is stressful. Estate planning can’t save you or your family from having to experience these events, but it can make things easier. It can prevent unnecessary court proceedings, minimize legal costs, and make sure that your family not only knows what you’d want, but has the authority to carry your wishes out. I can’t emphasize enough how important this is.
Ultimately, that’s the greatest benefit of estate planning: knowing you’ve done everything you can to protect your family in the event that something happens to you. It might just be the best money you spend for them.