COVID-19 has made many people think about estate planning. Yet, there are still those who avoid it. While I write regularly on why you need to plan for incapacity and long-term care, those are far from the only risks in failing to do an estate plan. There are a host of financial and legal problems as well as stress that you will leave behind for your loved ones if you don’t take the proper steps. Consider these issues:
- Who do you want to get your assets? Without a will, they may go to someone you didn’t intend. There may even be litigation over the issue that eats up your estate leaving heirs with little to inherit. In addition, your heirs will have to go to court to have an administrator appointed to distribute your estate.
- Who will care for your minor or disabled children? You can select an appropriate guardian for them in your will and set up trusts to protect assets for them. Without these protections, you cannot control who will be guardian and it may become a family member that you don’t want. From a financial standpoint, your minor child will receive inherited funds at age 18 instead of at an older age established in a trust. Without a trust, special needs adult children could lose their government benefits until the inheritance is depleted.
- How can you save money and protect assets? There are income, gift and estate tax strategies that can maximize your assets for heirs. In addition, you can preserve assets for heirs who may have financial or other issues.
- Have you been married more than once or have children from a prior marriage? Without a will and other estate planning documents, your current and ex-spouse may have unexpected rights. Children from a prior marriage may also be inadvertently disinherited.
- Do you have a business? You must address what happens to your business in the event you become incapacitated or die otherwise your business, heirs, employees and business relationships could suffer significant financial losses as well as stress.
- When was the last time you reviewed your beneficiary designations? Bank and retirements accounts, life insurance policies and other accounts require that you name a beneficiary. You may think this is an easy way to avoid estate planning completely, but it can cause many problems. It may result in someone you didn’t intend getting your money or leaving someone you wanted to inherit with nothing. Estate planning documents can be coordinated with beneficiary designations to ensure your wishes are implemented.
- Are you or loved ones at risk of financial predators? Unfortunately, many seniors fall prey to scams or put trust in someone who takes their money. Using tools like a power of attorney and trusts can eliminate some of those risks.
- Who will make decisions for you when you can’t? Don’t leave your loved ones to deal with the emotional and legal challenges of seeking appointment as a guardian for your care. You are also giving up control over health and long-term care decisions.
To protect yourself and loved ones, you need essential estate planning documents, including a will, durable power of attorney, and health care proxy. In addition, living trusts, special needs trusts, life and long-term care insurance, and other documents may also be invaluable. Make sure you select appropriate people to act as guardians, executors, trustees, and agents. You should also discuss your plans with your family but if you anticipate conflicts, discuss elder mediation with your attorney.
Finally, put together a financial and legal inventory to save loved ones a great deal of time, money and stress in handling your finances or estate if something happens to you.
Don’t delay your estate planning. Contact me for a consultation.