Making excuses to delay estate planning is easy. In fact, in my practice it’s a way of life for some people. I can’t tell you how many times I’ve heard people say: “I’ll worry about it later when things settle down more.” Or “I don’t have an estate, it’s too small to be affected.” Or even, “I’m not ready to think about that yet.” However, if you are unprepared when incapacity or death strikes, your family’s financial future may not be protected. While there is no designated age for beginning to plan your estate, waiting too long may rob your beneficiaries of much of their inheritance and takes a devastating emotional toll on top of that. That’s why it’s important to take the time now – before you need an estate plan. I suppose sometimes people wait because they’re intimidated and overwhelmed, which is understandable. The best way to overcome this is to educate yourself. You can start by checking out my Frequently Asked Questions about estate planning which starts with the most basic question of all, what IS estate planning? It even has questions you should ask any estate planning attorney you meet with. The key is to educate yourself about estate planning so you can make the best decision for your family.
I hear the question many times do I need a will or a trust? Well, it depends on what it is you’re looking to accomplish, but this article in our newsletter separates fact from fiction and will give you a much better idea of what is best for your family. What if you were to die intestate, without direction as to who gets your property (such as a will or trust)? As the foundation of your estate plan, a will provides for distribution of your assets, names a guardian for your minor children, and appoints an executor or personal representative to see that your wishes are carried out. If you die without a will, a court will make these decisions for you. Consequently, your estate may not be distributed as you would have wished (see California Probate Code § 6400-6414 if you’re curious about who the state pre-determines will get your assets if you don’t have a will or trust). Failing to make a will means you relinquish control over what will happen to your assets – and perhaps your family’s financial status – upon your death.
I will share with you one quick heartbreaking story about waiting to plan that a fellow attorney shared with me about one of his clients. My colleague was called by the partner of her now deceased significant other. This woman, who we’ll call Jane, and man, who we’ll call John, lived together for more than 23 years, sharing their entire lives together. The only thing they didn’t do was get married or file for a domestic partnership even though they were otherwise a married couple for all intents and purposes. Unfortunately, John was diagnosed with dementia before my colleague was called by Jane to plan their estate.
Sadly John died in the hospital a few days later with no estate plan. He had a very modest estate of just over $100,000 (the minimum amount required to go through probate) but do you want to guess how much Jane was entitled to under California law? Well, if you guessed NOTHING you would unfortunately be correct. John and Jane lived together for nearly a quarter century and you can be sure John wanted to give Jane much more than nothing because she was the biggest part of his life. Jane had bothered John earlier about doing it, but as a classic procrastinator, he waited and unfortunately he waited too long. This is one of I’m sure hundreds of similar heartbreaking stories that can so easily be avoided with simple planning if you just stop playing the waiting game.
Once you do have a plan in place, leave a paper trail. An estate plan isn’t very useful if no one in your family knows what it is, so be sure to maintain clear records. Make a list of your assets, including securities, retirement plan accounts, savings accounts, real estate, life insurance policies, and so on, along with information to identify and locate the accounts. Make a second list of your liabilities, including loans, mortgages, and credit card obligations.
Personal information, such as your Social Security number, birth certificate, divorce decree, and similar documents, should be stored in a secure and accessible place. Include cemetery plot records and detailed funeral instructions. List the names, addresses, and phone numbers of your attorney, accountant, executor, and trustee, if applicable. By letting your family know where your important records are kept, you’ll help to ensure the timely transfer of your assets to your heirs. We provide an asset locator sheet/final instruction letter to our clients for this purpose. I suspect most other attorneys do something similar.
The consequences of waiting too long to plan your estate can be financially and emotionally devastating for your family. The Holiday Season is the ultimate procrastinator’s excuse for delay so don’t fall into that trap and make sure you go into 2012 with an estate plan that achieves your family’s goals.