What Is an Estate and What Planning Is Involved?
It’s important for you to understand what the word “estate” means so that you do not underestimate the broad scope of the term. The “estate” consists of all the property a person owns or controls. Examples of the more well-known items include personal property, real estate, bank accounts, insurance policies, business interests, certain trust accounts and debts, just to name a few.
While it’s essential to build an estate plan to see that your property is correctly distributed (according to your wishes) to your beneficiaries in an efficient manner, there’s so much more to estate planning besides just monetary items. Who will take care of your children if both parents are gone? Who will make healthcare decisions for you if you are unable to make them for yourself? What will happen to your pets? Who will handle your outstanding debts? These are just a few of the questions that effective estate planning will uncover and make you think about to protect your loved ones and give them direction in the event you become unable to care for yourself.
Who Needs an Estate Plan?
The popular belief is that only the wealthy need to have an estate plan because they’re most likely to be affected by taxes in the event of death. That statement couldn’t be more untrue, as estate planning consists of much more than just the concern for paying taxes on inherited property and possessions. The reality is that most people age 18 or older have some need in the estate-planning picture. It might be something as generic as a simple “will,” or it might be something extremely important, such as creating powers of attorney to allow a trusted person to make financial and health care decisions for you in case of temporary or permanent incapacity. Just as important, ensuring you have recommended guardians for your small children should something devastating happen to you.
Negative Effects of Failure to Plan
The effects of failing to properly plan your estate will most certainly affect your heirs and loved ones more than you are affected once you’re in your grave. Improper planning can initiate negative feelings among your heirs if you have not properly designated your wishes in writing. It can cause unnecessary probate (court determines the distribution of property), which can be costly and time-consuming. In some cases, it can leave children, grandchildren, and pets in a state of improper or undesired guardianship if you don’t have written documents in place to address this.
Another area of concern should be your healthcare in the event that you cannot make decisions on your own, or what should be done if you are put in an unfortunate situation where life support is required.
Hire an Attorney or Do It Yourself?
If your estate is very simple, your children are grown and both you and your intended heirs have no complications to consider, then an inexpensive estate planning software or another do it yourself option may suit your needs. Consider whether it makes sense to trust a DIY solution to protect and pass on your accumulated life’s work and savings. Otherwise, seriously consider working with a good attorney to help get your affairs in order and to get it done right.