Why do I need to Estate Plan?

Now that you know {LINK TO What Can EP Do?} what an estate plan is, you might be wondering if you need an estate plan. If you are reading this and over the age of 18 the answer is yes – in every single case!

As you know, an estate plan is a set of legal documents that cover your incapacity and death. Not a fun topic, to be sure, but a necessary one. For every call I receive asking for help in creating an estate plan, I receive at least 4-5 asking for help with a divorce or child custody matter. I specialize in estate planning and small business creation, I don’t handle those matters. I used to joke that I don’t practice in an area of law that is helpful; in reality, my practice encompasses the one area of law that absolutely every adult needs.

No really, an estate plan is the only legal work you are absolutely guaranteed you will need. And honestly, it is most helpful when utilized proactively.

Why is that? Because if you die without a will a judge determines the guardian for your children. This may be a perfect person on paper, but practically speaking the last person you would want to raise your children. This judge has not had a conversation with you to know your wishes, and 99% of the time the person they are appointing as guardian has also not had conversations with you to know what values you want to impart on your children. A judge will also determine who will be your executor, or the person who administers your estate by selling and distributing your assets. This person also has typically not had any discussions with you about your assets and will not know where to find them.

It does not matter that these conversations have not occurred – the decisions must be made.

A judge will not determine who will receive your assets; that is dictated by the intestate succession laws of your state. These laws do not allow your child to be disinherited because you are estranged from them. They also do not allow your step-children, the ones you have raised since they were 2 or 3, to inherit from you. In order to have complete autonomy over the distribution of your assets you must create a will or trust.

If you have a will or trust you’re at least partially ahead of the game. However, the problem is that you have not appointed anyone who can handle your affairs if you are incapacitated. If you are in an accident and unable to file your taxes by April 15 the IRS does not care. If you are temporarily unable to care for your children, the guardianship clause of your will is not valid because it is only valid on your death, but your child still needs care. A will is a good first step, but there are more documents you must create to be fully prepared.

On the flip side, the agent named in your power of attorney has no authority to pay bills or take care of your children upon your death. A power of attorney is no longer valid upon your death so all authority a power of attorney has ends at your death. If you need a permanent guardian for your children or someone to handle your financial assets, your power of attorney is of no use.

If you don’t have an estate plan you are like most Americans; it is estimated 60% of adults do not have these crucial documents. However, don’t feel like there is strength in numbers. A defense of “everybody is doing it” usually does not go over well in court. The best defense is a good offense – this means you must create an estate plan that captures your wishes in writing and leaves no debate about your intent. If you would like to get started on your estate plan, you can get a copy of our estate planning analysis here!

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