Your estate plan. One of America’s least favorite topics. But taking the time now can save a heap of trouble later. Here are five reasons you should have an estate plan.
- Appointing a Personal Representative
Your Personal Representative (also known as the PR, or the Executor), will be the one to manage your estate when you pass away. They can sell or transfer assets, pay creditors, and ensure your wishes are honored. If you have no will upon death (called being “intestate”), virtually anyone can petition to run your estate, including creditors! In your will, however, you can designate the right person, who will carry the role out responsibly.
- Deal with Problematic Family Members
Without a will, an estate is managed on default settings. Distribution of assets, for example, will follow a predetermined path along the family tree, no matter how estranged family members may be from the one who has passed. If someone passes away without a spouse, their children will inherit the estate in equal shares; if they have no children, their parents inherit; if they have no living parents, their siblings inherit, and so on.
An example can illustrate the unfortunate circumstances this can lead to. Imagine Paul passes away with his wife, children, and mother having passed away before him. Paul would have liked his estate to pass to his sister, with whom he is very close, and not his father, who abandoned him 30 years ago. But if Paul doesn’t have a will, 100% of his estate will go to his father, and nothing will go to his sister.
A good estate plan will make sure this never happens to you.
- Avoid Tax Consequences
End-of-life taxes can cost thousands to hundreds of thousands of dollars. With the right planning, however, you can mitigate or even avoid the burdens these taxes can place on your survivors.
Married couples, for example, can shield millions of dollars of taxation with some expert advice and the right set of documents. Unmarried people have options available to them too, all of which can save money in the long-term. The point is made time and again in our probate cases: it pays to be prepared.
- Protect Minor Children
When parents pass away, the lives of their minor children can be completely upended. Guardianship battles can take years, cost tens of thousands of dollars, and grant custody to people the parents never wanted involved in the first place.
Estate planning can prevent this. In a will, you can nominate a person (or persons) of your choice to serve as the child’s guardian, and backups in case your first choice doesn’t turn out. Much better than leaving it to chance.
Additionally, your estate plan can allocate assets to a trust to provide for health, education, maintenance, and support of your children until they reach a responsible age (an age you get to determine). You will be able to rest easy, knowing your assets will continue to provide for your children’s future.
- Ease the Probate Process
In Washington State, probate is a relatively streamlined process, through which the affairs of the one who has passed are wound up, creditors are dealt with, property is sold or transferred, and heirs are given their shares of the estate.
Even so, there are plenty of potential pitfalls along the way. A will (or a trust) provides a roadmap for the probate. Having this roadmap will save your heirs time, money, and frustration. With a good estate plan, your heirs may be able to complete a probate in six months or less, with far less hassle, with inheritance in hand, and without any liability to worry about.
These are just a few of the many reasons it is important to have an estate plan. A knowledgeable estate planning attorney will be able to evaluate your estate and provide the best options to accomplish your estate planning goals.