Like most serious matters, estate planning is a less-than-popular conversation topic. But some of the reason for this is confusion. What is estate planning, and why should you care about it? Here, we round up some of the top reasons to create and have a solid estate plan, no matter who you are.
It protects you, your spouse and your children.
Put simply, “estate planning is deciding what should happen to your property at your death or should you become incapacitated and unable to manage it on your own,” said David Goldman, an attorney who specializes in family, estates and elder law.
This can include making health care-related choices that go into effect in the event that the individual in question ever becomes unable to make property- related decisions themselves. For those with minor children, estate planning can also entail naming guardians and custodians for the children’s assets.
The consequences of not planning can can mean your assets going where you didn’t want them to go.
“If a person does not plan, the state of Maryland provides a plan for them which may not match their wishes,” said Eleanor Naiman, an attorney with more than 30 years of estate planning experience.
States differ in how assets are divided after a spouse dies. In some cases, the spouse gets all the deceased’s assets. In other cases, a spouse may receive a fraction of the deceased’s estate and the children share the remaining portion. Distributions change if the deceased had no spouse at the time of death, and if there are neither spouse nor children, then “you start getting to more distant relatives,” Goldman said. Thinking ahead can help the people who survive you to manage any conflict in advance.
It can prevent feuds.
Good estate planning can minimize the likelihood of intra-family fights over money. How? By appointing a single individual as “personal representative,” someone with the authority to carry out your wishes as put down in writing. If this appointment is not already set at the time of a death, the deceased’s children can argue in court over who gets it and “even good relationships can start to unravel very quickly,” Goldman said. “The more guidance that can come from parents, the better.”
It can stop irresponsible spending in its tracks.
In the absence of an estate plan, a minor in line to inherit money (including life insurance policy windfalls) will gain access to the assets when he or she turns 18. And that’s not an age at which many people make their best financial decisions.
So if part of your estate plan includes the creation of a minor’s trust, you can appoint someone to manage the money until the beneficiary is a bit more mature, say age 21 or 25. Or you can have them get half the sum once they reach one age, and the other half when they reach another.
“You can do anything you want, just about, with trust planning,” Goldman said.
It can save you money.
Of course, the 2017 tax law has made changes across the country. For some, estate tax exemptions have led them to think they don’t need to pay as much attention to the issue of tax and estate planning. That kind of thinking is a mistake, Naiman said.
For the very wealthy, “there is important tax planning that can save a whole lot of money,” Goldman added. And for the very elderly, failing to do the kind of planning that can help you figure out how to pay for convalescent care can wind up costing you your life savings “in a matter of months,” Goldman said.
Experts to help you abound.
Attorneys with a specialty in estate law are well-equipped to handle any questions and concerns you might have about your assets and who will get them after you’ve gone.
Estate planning can be complicated, and making a mistake in one area can lead to a sort of domino effect, making other parts of the planning that much more difficult. Attorneys with estate law specializations know “ways to do things that laypeople just won’t be aware of,” Goldman said. So it’s well worth it to get some advice. JN