An estate plan is a collection of legal tools and documents – such as wills, trusts, powers of attorney, healthcare directives, and others – that help determine how your hard-earned money will be protected during your lifetime and passed on to your chosen beneficiaries after your death.
Rarely do people think about estate planning, especially if they aren’t retired yet or are in the stage of life where they have young kids – many people don’t really think that they need to have an estate plan. They think that it’s an unnecessary “extra”, that their family will know them enough to know their wishes if anything were to happen to them, and that they don’t have enough possessions for it to really matter that they have legal documents specifying who gets what. Essentially, they assume that everything will work out okay without them having to take any sort of action.
Here’s an important warning, if you clicked on this blog post wondering whether or not you really need to have an estate plan or if it’s basically fine if you don’t have one – that assumption could not be farther from the truth.
Not having an estate plan can cause a ton of problems for yourself and your loved ones down the road. At Daly Law Offices, we’ve worked with many grieving families who are experiencing tremendous amounts of stress and financial hardship (and even inter-family conflict) because someone in their family passed away without having their affairs in order. We want to help you avoid that becoming your legacy! Below we’ll explain why an estate plan is so important, address common objections, and give you an idea of what a solid estate plan should include.
Here’s The Main Reason Why You Really Need An Estate Plan
Having an estate plan ensures that everything you’ve worked for and everyone you love will be protected, no matter what. It gives you an unmatched level of legal and financial security. It guarantees that your family and the state of Pennsylvania will know what you want and abide by what you want. It preserves your assets and transfers them, with the least amount of red tape, to the people you want to manage or inherit them if something happens to you.
Without an estate plan, no one will have in legal writing what your wishes were. Your family may fight over what you would have wanted. The state’s laws will control where your possessions end up, and when. Your family may not get your stuff immediately or at all, and your savings could be seriously depleted by court costs. It’s not as simple as saying “I want to leave everything to my kids”, even if you just have a will…..the state requires certain documents to be in place in order for that to happen. That’s why you really need an estate plan – because if you don’t, your family could suffer during a time when they are supposed to be grieving in peace and moving forward.
Don’t Only Rich People Need An Estate Plan?
One of the most often cited reasons for people failing to make an estate plan is that they think estate planning is just for really rich people. The average middle class family may not think that they have that much in terms of assets, and certainly not enough that they need to pay to make a trust to protect it. However, that’s a myth; if you own any property in your own name, or have any beneficiaries (particularly minors), you need an estate plan.
There are two primary reasons for this: one is that an estate plan does more than just transfer your assets to your family when you die. It also tells your family, the state, and your medical team what to do with you and your assets if you are injured or ill and can not make independent decisions for yourself. Whether you are “rich” or of modest means, this is an incredibly valuable function.
The second reason is that an estate plan – specifically a trust – allows you to set limits on when and how your beneficiaries inherit. If you have a beneficiary who isn’t great with money, whose spouse you don’t trust, who is in a great deal of debt, who has a risky career, who likes to gamble, or something of that nature, you can specify that their inheritance be paid out to them over a certain amount of time or for specific reasons. This can protect them and your hard-earned wealth, even if you don’t think it’s much!
If you aren’t rich, and don’t make an estate plan, your family will likely still have to go through a Pennsylvania court process known as probate, which can be expensive and deplete the few assets you do have. It’s almost better to make an estate plan if you aren’t wealthy because of this!
Aren’t You Young & Healthy Enough To Wait?
Estate planning should happen as soon as possible, because none of us know what the future will hold or how much time we have. You may think you can wait for retirement to deal with all the “legal stuff”, but an accident or illness could befall you at any time. It’s not pessimistic to think this way, although it’s not fun, and it can be highly emotional – it’s realistic. While you still have the physical and mental capacity to do so, you should take the time to plan ahead. Later isn’t promised!
Can’t You Just Have A Will?
At the very least, you should make a will. The purpose of a will is to make your wishes known for what family members, friends, and/or charities will inherit what possessions or assets of yours when you pass away; it is legally enforceable if created correctly, and can ensure that your wishes are carried out.
A will is part of a comprehensive estate plan, but it is not a comprehensive document in and of itself, and there are some drawbacks to having only a will that many people don’t realize. A will does not help you or your family if you become medically incapacitated and need family members to make critical decisions about your medical care; it also doesn’t protect your assets from nursing home costs, if you need to enter a nursing home at some point in your life and have to pay for care (since Medicare and most private health insurances don’t cover that cost).
Wills also have to go through probate, which is a time-consuming Pennsylvania court process. Your will has to be probated before any of the directions in the will can be carried out. If your will is outdated at the time of your death, or not legally compliant with state laws, or if you have beneficiary designations on other accounts that don’t match those on your will, it may be rendered invalid, and the state’s laws will determine what happens to your possessions. Even if everything in your will is perfectly set up, probate still has to occur, and can take anywhere from 3-6 months or a year or longer before your family can inherit according to the terms of your will.
That’s why it’s so important to have other documents – like a trust, or power of attorney – that don’t have to go through probate and that can actually be useful to you and your family during your lifetime.
Can’t You Do It Yourself Instead Of Working With An Attorney?
Some people realize that they need to make an estate plan, but they attempt to take a DIY approach in an effort to avoid attorney fees. However, any mistakes made along the way can render the estate plan completely ineffective and unenforceable under the law – this will end up costing your family potentially thousands of dollars in court costs and other fees. An attorney can personalize your estate plan and ensure that it will work for your specific family’s needs and is up-to-date with the most recent Pennsylvania laws.
Call Daly Law Offices Today.
If you don’t have an estate plan yet, our law firm can help you craft one that can give you and your loved ones peace of mind. Call today to book a free consultation and discuss your next steps.