Many people erroneously think that estate plans are for someone else, not them. They may rationalize that they are too young, too old or do not have enough money to reap the tax benefits of a plan. The following list makes clear however, that estate planning is for everyone, regardless of age or net worth. Here are ten reasons why creating your estate plan now, is important.
1. Loss of capacity. What if you become incompetent and unable to manage your own affairs?Without a plan the courts will select the person to manage your affairs. With a plan, you pick that person through a comprehensive power of attorney.
2. Minor children/grandchildren. Who will raise your children if you die? Without a plan, a court will make that decision. What is the best way to provide for grandchildren? With a plan, you are able to nominate the guardian or trustee of your choice in order to protect your children and/or grandchildren.
3. Preparing a will. Who will inherit your assets? Without a plan, your assets pass to your heirs according to your state’s laws of intestacy (dying without a will). Your family members (and perhaps not the ones you would choose) will receive your assets without benefit of your direction or of trust protection. With a plan, you decide who gets your assets, and when and how they receive them.
4. Planning for long-term care. What if you and/or your spouse need long-term care at home or in a nursing home? Long-term care costs are staggering. Did you know that one month in a nursing home can cost more than $15,000? With a proper plan in place we can protect assets in the event of unexpected long-term care needs.
5. Children with special needs. Without a plan, a child with special needs risks being disqualified from receiving Medicaid or SSI benefits, and may have to use his or her inheritance to pay for care. With a plan, you can set up a supplemental needs trust that will allow the child to remain eligible for government benefits while using the trust assets to pay for non-covered ancillary expenses.
6. Keeping assets in the family. Would you prefer that your assets stay in your own family?Without a plan, your child’s spouse may wind up with your money if your child passes away prematurely. If your child divorces his or her current spouse, half of your assets could go to the spouse. With a plan, you can set up a trust that ensures that your assets will stay in your family and, for example, ultimately pass to your grandchildren.
7. Financial security. Will your spouse and children be able to survive financially? Without a plan and the income replacement provided by life insurance, your family may be unable to maintain its current living standard. With a plan, owning certain investment vehicles can mean that your family will enjoy financial security.
8. Retirement accounts. Do you have an IRA or similar retirement account? Without a plan, your designated beneficiary for the retirement account funds may not reflect your current wishes and such designation may result in burdensome tax consequences for your heirs. With a plan, you can choose the optimal beneficiary.
9. Business ownership. Do you own a business? Without a plan, you cannot name a successor, thus risking that your family could lose control of the business. With a plan, you choose who will own and control the business after your demise.
10. Avoiding probate. Without a plan, your estate may be subject to delays and excess fees, and your assets will be a matter of public record. With a plan, you can structure things so that probate can be avoided entirely if necessary.