Why it’s important to plan for when you won’t be here.
Nearly everyone has an estate. Your estate consists of everything you own, including real estate, vehicles, investments, businesses, personal possessions, life insurance, cash, and so on. It might be modest or it might be substantial, but no matter its size, you can’t take it with you when you die. You need an estate plan.
While I’m going to talk primarily about financial issues, keep in mind that an estate plan goes beyond who gets your money and material possessions when you’re gone. It should include instructions for who will take care of you and your financial affairs should you become incapacitated; name a guardian for any minor or dependent children if you should die or be unable to care for them; designate beneficiaries of your financial accounts; and outline whatever other wishes you have concerning the settlement of your estate.
Having an estate plan means:
1. Your assets will be distributed according to your wishes.
If you die intestate (without a will), a state probate court will determine the distribution of your assets, and it likely won’t be in the most efficient or effective way. Probate typically takes six months to a year, during which your heirs do not have access to or control of your assets.
With an estate plan in place, your assets can be promptly distributed to the people and in the manner you have stipulated. You’re not only getting what you want, you’re making it easier for your heirs.
2. What you leave will have the impact you want.
The process of preparing a comprehensive estate plan gives you the opportunity to thoughtfully consider how your assets will be distributed and the impact that will have on your beneficiaries, both financially and emotionally.
Receiving a sizeable lump sum of cash might not be the best thing for your heirs. For example, if you have a child with special needs who is on Medicaid, a large inheritance may disqualify them from future benefits. You may have an adult child who struggles with addiction or mental health issues for whom an unrestricted amount of money may do more harm than good. Your estate plan can consider those issues and address them.
In addition to what you leave your family, your estate plan is a way to make contributions to your church or favorite charities, either for general use or a specific purpose, in a lump sum or over time.
3. You can guide and preserve family harmony after you die.
Communication is an important element of estate planning. You can explain your decisions to your heirs before your death and also in the plan documents. For example, you can provide your reasoning if you decide to not leave your children equal amounts or if you’re leaving cash or property to extended family or to people outside your family.
The Parable of the Prodigal Son teaches us how the distribution of wealth can not only change lifestyles, it can create conflict. Careful estate planning and communication can prevent such problems as we follow 1 Timothy 5:8 (RSV): “If anyone does not provide for his relatives, and especially for his own family, he has disowned the faith and is worse than an unbeliever.”
Certainly it’s not pleasant to think about dying, but as crazy as it might sound, you can have fun with your estate plan. It’s a chance to look into the future and know you’ll have an impact not only on your family but on total strangers you will have helped through your charitable bequests.
If you don’t have an estate plan, contact an estate planning attorney to begin the process. If you have one, review it periodically to be sure it’s up to date and still reflects your needs and wishes.
Related:
Estate Planning: Are Your Heirs Prepared for What You’ll Leave Them?
