Hey America! Do you have an up-to-date will? Do you think estate planning doesn't apply to you? While it's tempting to think you'll live forever, you could leave a legacy of misery for your family if you don't plan ahead for your demise. So, we are celebrating the launch of National Estate Planning Awareness Week to encourage our readers to take action. This is your annual reminder that no matter your age, how many assets you have, or if you are working or retired, you should have an estate plan for the future. If you don’t already have an estate plan, set aside Monday, October 21, through Sunday, October 27, to sit down and find out what estate planning is and why failure to plan is a recipe for chaos.
National Estate Planning Awareness Week
Over half of all Americans, or 56%, do not have an up-to-date estate plan. And 40% of Americans don’t think they have enough assets to create a will, according to Caring.com’s 2024 Wills Survey. National Estate Planning Awareness Week, which occurs the third week in October each year, was adopted in 2008 to help the public understand what estate planning is and its importance.
The week helps to draw attention to the need for an estate plan. It highlights how having a plan can help prevent family members, heirs or other beneficiaries from being exposed to complex administrative and legal processes, such as probate and taxes.
Not having an estate plan or a will could have certain implications, such as a delay in the disposal of assets,” Robert Figueiredo, a portfolio manager at Reynders, McVeigh Capital Management in Boston, explains. “Being exposed to public records should it go to probate court, or having assets distributed against your personal wishes because of state laws can sometimes mean higher estate taxes due if assets are not titled correctly.”
What is an estate plan
An estate plan spells out what you want to happen to your assets in case you become incapacitated or upon your death. It can help minimize estate and gift taxes and ensure your heirs and beneficiaries receive assets according to your wishes.
An estate plan can and should change over time. Typical documents include a will, trust, power of attorney and a living trust or advance directive, although a plan may include more or less of each of these components. It’s common for your estate plan to include the bestowal of your assets, like stocks, bank accounts, real estate, jewelry, and that invaluable signed Picasso painting, to heirs.
It may also include your wishes for guardianship of minor children and pets, settling debts, the peace of mind that your loved ones are provided for and control over health care if you become incapacitated.
Lawrence Sprung, CFP and author of Financial Planning Made Personal, makes this point. “An estate plan is a critical tool to make sure the assets and items you own will be passed on to those that you want to have them. Some documents also allow others to assist you while you are alive, like a power of attorney or health care proxy. Many of these documents should be considered once you turn legal age, at eighteen, in most cases." He goes on to say that his kids both executed power of attorney and health care proxies on their eighteenth birthday, which, when the time comes will help them navigate things if he and his wife cannot do so.
Attorneys experienced in estate law can help set up your estate plan, review your current assets and debts and help you write a will or power of attorney if you don’t have one. Estate planning should be used by everyone — not just the ultra-wealthy.
Why you need an estate plan
If you’re over 18, own a home, have money in the bank or have children or other dependents, you should have an Estate Plan. It doesn't matter if you are single, married, divorced, a man or a woman; you need an estate plan that protects you, your assets, and your loved ones from unnecessary questions upon your death.
While an estate plan can’t prevent death or illness, it can protect your family from stress and emotional fallout once you’re gone. If you die or become incapacitated without a plan, your legacy is left to your state’s intestacy laws.
This varies state by state. Sprung adds, “Without a proper plan, most states have a plan for you. This means that if you die without having the proper documents in place, your assets and belongings may be distributed in a way that does not align with your wishes.” In other words, the state where you reside dictates who receives them.
Another thing to remember is that whether or not you make a will, your estate must go through probate — the court-administered process of distributing your assets. With a will, probate will distribute your assets the way you want. Without a will, there is no guarantee that will happen.
Attorney Arash Sadat, a partner with Mills, Sadat, Dowlat LLP, says that one of the most common issues he sees in estate matters is a conflict between adult children from the deceased's first marriage sparring with the surviving spouse from a second marriage.
"If you are in a second marriage and have children from a first marriage, it's crucial to have a very clear estate plan to make your wishes known to all family members, ideally accompanied by a conversation about what is to come so there are no surprises. Your children may understandably expect an inheritance after your passing, but so will your surviving spouse. These kids-versus-stepparent fights can sometimes become very bitter and contentious. But a detailed estate plan might save your family a lot of heartache, not to mention legal fees."
Review your estate plan regularly
As life changes, your estate plan can and should change, too. Most experts agree you should review your estate plan annually or when one of these life events occurs:
- Purchase a new home or real estate
- Marriage or divorce
- Birth, adoption, or death of a child
- Death of your partner or spouse
- Change in beneficiaries
- Death of beneficiaries, guardians, executor(s) or trustees
- Sale of a property
- Birth or adoption, or you're raising grandchildren
- A move to another state
- Changes in laws around estate taxes
- Significant changes to your financial situation
Estate planning and trust expert Christine Barned, Esq., of Cole, Scott & Kissane, explains, "Updating your beneficiaries periodically and upon life events is important to ensure you are taking care of the ones you wish to and not depriving them by inadvertently allowing your assets to be passed on to individuals or organizations that are no longer your priority."
Share your estate plan
After you’ve made your estate plan (we are confident you will make one if you haven’t already), it’s a good idea to put the documents in a safe place and tell someone you trust where to find them. If you don’t, you may leave your family scrambling to find the documents when needed. Often, your hospital, clinic or primary care physician will have copies of your living trust and healthcare power of attorney, but your family should have a copy also. Give your executor or executors a list of all your accounts, stocks and bonds, assets and debts and other records.
Bottom line
Estate planning can seem daunting. Estate taxes, probate, trusts and other estate issues are complex concepts subject to ever-changing federal and state laws. That said, most people find that once they understand what is needed and all the pitfalls, like your heirs blowing their inheritance, it doesn't seem so overwhelming. Of course, you can also hire an attorney to draw up your documents and navigate estate taxes.
Unfortunately, it’s always that first step that’s often so hard to take. So, to ensure the most secure position for your estate, work with a qualified tax, legal or financial professional to create and implement your estate plan today.
