It can be scary to consider your own death. But death can be unexpected and untimely and there is the potential to become incapacitated due to illness or injury, so planning your estate is not something to put off.
The consequences of not having an estate plan are great. Planning your estate ensures that should you become incapacitated or pass away your wishes will be carried out. Planning your estate allows you to specify a guardian for your children and pets, avoid the disadvantages of Probate Court, reduce or avoid avoidance estate taxes, reduce conflict and disagreements, provide access to digital assets, protect yourself should you become incapacitated, and protect your beneficiaries and your privacy.
Here are 9 reasons to plan your estate:
1. Specify a guardian for your children
If you have a minor child or a child with special needs, you need to name a guardian who will raise your child should both parents die. If you do not name a guardian for your child, a judge will determine who will raise your child. Proper estate planning ensures that your preferences and desires regarding the identity of your child's guardian are known and followed. You can address guardianship of your children in a Revocable Living Trust.
2. Specify a guardian for your pets
Should you become ill or you die, who will take care of your pet? You do not want to use a Will to address guardianship for your pet, as it takes time for Wills to be probated, and your pet could be given away, sent to a shelter, or euthanized before the court has finalized its decision. To ensure that your preferences and desires regarding a guardian for your pet are known and followed, address guardianship for your pets in a Revocable Living Trust.
3. Avoid the disadvantages of Probate Court
Even if you have a Will, if you die without a Trust in place, your loved ones will need to go to Probate Court and incur significant costs, delays, and loss of privacy rather than being able to focus on mourning your loss. If you die without a Will, the Probate Court determines how to divide your assets according to state law. The Probate Court process subjects your heirs and beneficiaries to delays, hassle, and expense that can be avoided with a little bit of planning on your part.
4. Protection of your privacy
A Revocable Living Trust ensures that your personal affairs remain private. If you do not establish a Trust, your Will becomes a matter of public record when it is submitted to the Probate Court. If your assets are funded into the name of the trust, Probate will not be required to transfer ownership of those assets to other individuals, so when you die your private matters remain private.
5. Reduction and avoidance of estate taxes
You do not want your estate or beneficiaries to have to pay taxes that could be avoided. The creation of a Revocable Living Trust may help to avoid paying excess estate tax. Creation of an A/B Trust (an option for married couples) and additional tax avoidance strategies in a Revocable Living Trust should be discussed with an estate planning attorney. Planning in advance may reduce your estate tax bill.
6. Reduction of conflict and disagreements
You have just died. Your loved ones have enough to deal with. You don't want your death to leave your family bickering over who should be the representative of your estate or fighting over who will receive some possession. Planning your estate alleviates some of the burden of your death, helping to avoid disagreements amongst those you leave behind. Don't allow a lack of planning to create an unnecessary rift amongst those you leave behind. The money that it takes to plan your estate now is small in comparison to the financial and emotional damage that dying without an estate plan can have on those you leave behind.
7. Provide access to Digital Assets
How many times in a day do you log into a digital account? Logging into email, social media, credit card, and bank accounts can seem mundane. But should you pass away and your loved ones do not have access to those accounts, it can be very stressful and problematic. It is critical to ensure that your loved ones will have access to all of our digital accounts - your phone, computer, email, social media, and online accounts. Your loved ones will want to reply to text messages and emails, have access to all the content in your phone, update your social media accounts, and they will need to be able to pay your bills and cancel accounts that are no longer necessary. Your spouse will need to ensure that the house, car, utilities, cell phone, internet and all other bills get paid so that critical services remain on. You will want document all of your account logins, as well as how and when all of your bills are paid, and give clear instructions to your loved ones on how to find this information. If an account allows you to set a legacy contact, set one. In your estate plan, ensure that your digital assets are addressed.
8. Protection should you become incapacitated
Who would manage your affairs, care for your children and pets, pay your bills, and make decisions on your behalf if you became incapacitated by illness or injury? An estate plan can make it easy for loved ones to manage your affairs while you are alive should you become unable to manage your own affairs.
9. Protection for your beneficiaries
Concerned about a beneficiary who is not good with money or has a substance abuse issue? You can create provisions for the distribution of your assets to require that beneficiaries reach a certain age before receiving an inheritance or include a variety of restrictions to help protect your beneficiaries.
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