October is National Estate Planning Awareness Month. To help raise awareness of the importance of estate planning for families, we’ll be publishing blogs all month long that discuss various aspects of the estate planning process.
Here in the first blog, we dispel the mistaken notion some people have that estate planning doesn’t apply to everyone.
Estate Planning Is For Everyone
When they hear the term “estate planning,” some people think of an expensive and cumbersome process of meeting with attorneys and accountants to draw up dozens of complex documents that they don’t understand. That’s one reason why so many families neglect the estate planning process altogether.
This is often especially true for younger individuals and families with minimal assets who think that only older people with lots of assets need to worry about estate planning. As a result, less than half (44 percent) of Americans have performed the most basic estate planning exercise of creating a last will and testament.
In truth, estate planning has nothing to do with how old you are or the amount of money or possessions you have. A failure to conduct basic estate planning can lead to serious problems, including significant costs and long delays in estate settlement, for your family and heirs after you die.
Avoiding the Probate Process
One of the biggest problems that can result from failing to do estate planning is that your estate will likely have to go through the probate process before it can be settled. Probate is a legal process in which the probate court appoints an executor to administer your estate, since there is no will naming an executor. The court will then make decisions about how your assets are distributed to your surviving family members.
Of course, these decisions may or may not be in accordance with what your wishes would have been. In addition, the probate process will expose the private details of your estate to public review and scrutiny.
The probate process can take between six and nine months or longer — perhaps even years if your estate is complex and multiple heirs make claims on the estate. Also, the fees charged by attorneys, executors and others can eventually add up to thousands of dollars, which will reduce the amount of assets that are distributed to your heirs.
Preparing to Draft a Will
The first basic estate planning step for any individual or family, regardless of age or assets, is to draft a last will and testament. We will describe this process in detail in our next blog.
Meanwhile, here are a few things to think about in preparation for drafting your will:
- How do you want your assets to be distributed? For example, you can specify that your assets be transferred directly to your spouse or your children. Depending on how assets are titled and state probate laws, this may happen automatically. But it’s still a good idea to formalize this in your will.
- Who will you name as your executor? This is the person who will handle all the details of administering and settling your estate. You can name a family member (such as your spouse or adult child) or close friend, or you can designate a corporate executor, such as a bank or trust company. This may be a good option if you don’t believe a family member or friend is capable of handling the often complex duties involved in executorship.
- Who will you name as guardian for your minor children? This individual will be responsible for raising your children to the age of majority if you’re a single parent, or if you and your spouse die at the same time. So give this decision plenty of careful consideration and make sure the person you choose is willing and able to take on this responsibility.
- How will end-of-life decisions be made? These instructions should be spelled out in case you can’t make life-sustaining medical decisions yourself due to being in a coma or suffering mental incapacity. They are usually detailed in a separate document from your last will and testament, such as a living will.
Get Started Soon
If you are among the majority of Americans who haven’t yet started the estate planning process, make plans to get started soon. Your family members and heirs will be glad you did.
Please contact us if you have more questions about estate planning or need assistance in creating a comprehensive estate plan for your family.