For many people, the decision to prepare a Will is easy, but the motivation to follow through is missing. The thinking goes something like this:
What’s the rush? I am in good health. There are more pressing matters. I’ll get to it eventually. I plan on being around for a long time. Right now, I need to focus on supporting my family, saving for college and retirement, and paying for health care. I’ll prepare a Will at the end of the year when things slow down.
The problem is most people repeat this thinking year after year… Things never seem to slow down. Juggling time between work, family, and social events is difficult. Who has time to plan an exit strategy?
As estate planning attorneys, we can’t imagine why people aren’t lined up at our office door every morning like Apple customers waiting for the release of the next iPhone. Death and taxes – everyone’s favorite topics, right?
All kidding aside, preparing a Will is very important for the future of your family. If you unexpectedly pass away, your family must deal with the great emotional void created by your absence. They also must find a way to manage without your financial support. One can ease this burden by proper planning. So, why doesn’t everyone prepare an estate plan?
Recent surveys find that only about 50% of American adults have prepared a Will. According to one Gallup Poll, 71% of respondents aged 50 and older had a Will. That percentage fell to 37% for people under 50.
Why don’t people prepare an estate plan? Many people just haven’t gotten around to it. Others don’t believe they own enough assets to worry about estate planning. Still others believe that state laws mirror the wishes they would express in a Will or Trust. Are they right? Let’s take a look.
If you die without a Will in Connecticut, the laws of intestacy become your estate plan and determine who gets your probate property. If you think you don’t have a Will, think again. Did you know state law requires if you don’t have a Will and you are survived by children, your spouse gets the first one hundred thousand dollars, plus one-half of the balance of your estate, and the remainder is divided among your children (regardless of their age)? If any of your children are from a prior marriage, your spouse only gets one-half of your estate and the remainder is divided among your children. If you are married but have no children, the first $100,000 goes to your spouse, but after that your spouse gets 3/4 of the remainder and your parent(s) gets the remaining 1/4 . You would be hard pressed to find anyone who has prepared a Will intentionally dividing their assets in that manner, but that is what would happen without a Will. A Will ensures your property goes to the people you choose as you desire, not according to state law.
So, all I need is a simple will, right? No! A proper estate plan should address more than just the final distribution of your property. What about the important question of who will care for your kids if you die? Certainly, if you have children under 18, you owe it to them to choose a proper Guardian to take care of them. If you do not make a written nomination of guardians for your children, a judge will choose the guardians. Do you really want a judge to make that choice without your input?
A comprehensive plan should also cover the potential for physical or mental incapacity. Who will manage your assets if you become incapable? Who will make your healthcare decisions if you are unable? To address these concerns, your plan should include a Durable Power of Attorney to designate a person to manage your assets and an Appointment of Health Care Representative to designate a person to manage your health care.
What about your cherished pet? Will someone take care of Fluffy or will she spend her final days in an animal shelter waiting to be euthanized? A thorough estate plan will also cover the care of your pets when you are gone.
You should also consider the benefits of a trust. If you have children who haven’t reached 22, or adult children who are either disabled, owe a lot of debt, or are in the middle of divorce, including a trust in your estate plan gives you an opportunity to choose a person who will manage your child’s funds and assure the funds are not squandered or distributed outside the family to creditors or an ex-spouse. You can name a trusted friend, family member or professional to serve as trustee and oversee the trust investments and distributions. You can also avoid the need to probate the assets held in the trust at your death, which is desirable for out-of-state real estate.
Most conversations about estate planning begin with a client’s desire for a “simple Will.” However, a will is only one of many important documents that should be part of every estate plan. A proper estate plan addresses all of these issues and often more. Will 2014 be the year you finally prepare a thoughtful estate plan?
