We’ve all read or heard the stories. Someone passes away without a will, and potential heirs sharpen their knives in a free-for-all that can take years to play out in court. The emotional toll is immeasurable, with relationships incurring irreparable harm that can last generations.
Only one-third of Americans have a will or a plan to distribute their assets after they die, according to a new survey from Senior Living Referral Service Caring.com. Put another way, over two-thirds of Americans have a big hole in their financial plan. It’s crucial not to be part of this statistic!
Dying intestate—without a will—will have consequences no matter where you live. How your affairs are settled depends on the state in which you reside. Without a will or trust, the state chooses how your estate is divided and who will take care of your minor children.
That’s a recipe for a long and drawn-out court battle. And it is especially painful if there are unmarried partners, stepchildren, and even a parent’s own child who may lose an inheritance.
If you have recently crafted an estate plan with an estate attorney or have updated your will, a hearty congratulations goes out to you. A holistic financial plan includes a plan of succession.
If not, let’s get started.
What is a will? It is a legal document stating how you want your executor (the person legally obligated to administer your estate) to distribute your assets after you die.
Your estate will go through probate, the legal process for reviewing the assets of a deceased person and determining who inherits what, whether you have a will or not. If you have a will, it ensures the executor will honor your wishes.
What is a trust? A trust is a legal contract that allows another person (the trustee) to hold property for you (the grantor).
This is typically so the beneficiaries (individuals or institutions who stand to inherit something) can use the property at some point in the future.
What is a living trust? You create a living trust to hold assets before and after your death.
What is a testamentary trust? It is a trust created by the will and only becomes effective after the grantor’s death.
What is a power of attorney? A durable power of attorney enables your agent to act on your behalf if you become ill or are unable to make decisions.
A durable medical power of attorney allows you to appoint someone to make decisions about life-prolonging care, treatment, services and procedures.
Prepare your heirs
You don’t have to divulge the details, but informing beneficiaries opens the financial lines of communication and reduces the odds of a contested will. Surprises breed resentment, and resentment may lead to unwanted consequences. In addition, it promotes family unity at a time that can be exceedingly difficult.
Key takeaways
• Common estate planning documents include wills, trusts, powers of attorney, and living wills.
• Everyone can benefit from having a will, no matter how small their estate.
• Estate plans must be updated after significant life events.
• Keep those who need to know informed, including your beneficiaries and advisors.
Our objective is to initiate a dialogue, assist you in developing a plan, or motivate you to revise an existing one if the need has arisen.
We are always available to address any questions you may have.
