Every few months a news article appears providing stunning statistics on how many Americans do not have an estate plan. In the various studies, the percentage of adults without an estate plan hovers between 50-60%. Even more insightful, are the reasons the survey respondents give for not having an estate plan. These include: I don’t have enough assets to need an estate plan; my assets will just go to my spouse and children under the law; or I just don’t want to think about it. For each of these reasons, there is a better reason for planning on passing your wealth, whatever amount, and protecting your family in the future.
Reason One: I don’t have enough assets for an estate plan.
Response: The extent of your assets should not be the threshold question for whether you need an estate plan. The threshold question is: “Do you want to distribute your assets at your death to the people you care about in a manner that best supports them? Estate plans include a variety of tools – simple ones for straightforward estates and more complex tools for larger estates. The simplest tools are beneficiary designations on accounts and a beneficiary deed for your property. Wills and trusts provide additional resources for taking care of your loved ones in the future. For example, if you have minor children, an estate plan using simple trusts enables you to ensure your assets are used for their education and support and not released to your children when they turn eighteen. You can appoint a trustee to oversee their assets and designate guardians in the event neither parent can care for them.
Reason Two: My assets will just go to my spouse and kids under the law.
Response: Yes, but at what cost? The cost to probate the assets of a person who dies without a will are easily twice as high as the costs for a person who dies with a will. Without a will, the Court must determine the rightful heirs, a process that involves appointing a separate attorney to represent unknown heirs. Instantly, there is a longer hearing and a minimum of two attorneys participating. The statutory distribution of assets is simple when a person has children only from the current spouse. When there are children from a prior marriage, the allocation of the assets changes significantly and the current spouse may not have the support he or she expected. Adults in second marriages or with blended families especially need an estate plan to ensure that their families are supported in the manner they desire. Finally, many Texans believe that if they own their home as community property, on their death their spouse automatically inherits the entire interest in the home. Yes, the spouse will inherit the community property interest, but without some probate mechanism, the title of the property will not be clear. Years later, the spouse will have to pay to clear up the title when he or she is ready to sell the home. A good estate plan would have prevented this problem.
Reason Three: I just don’t want to think about it.
Response: Its time to adopt a new way of thinking. Estate planning is an opportunity to show you care for your loved ones. There are hard choices to make, such as who will be the guardian for your children and can you give assets away in a manner that is fair but not necessarily equal? We raise and work through these issues with clients every day. Estate planning is also an opportunity to plan for your disability. Imagine you become mentally incapacitated as a result of an illness or injury. Without a comprehensive estate plan, your family can be confused and even embattled about who continues the business, who handles financial obligations, and who makes medical decisions for you. Planning in advance for your possible disability lifts a heavy burden from the shoulders of your family members. Finally, estate planning can be an opportunity to put your values to work. Estate plans can be designed to help keep treasured land in the family, contribute to your charitable interests and your community, and provide future care and support to your children and grandchildren. When viewed from the lens of opportunity and care, the action of creating an estate plan becomes important and achievable.
I would love to talk with you and help you plan for your estate. Call me to set up a free 30-minute consultation at 512-894-5426.