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8 Reasons You Need an Estate Plan Even if You’re Not Wealthy

I don’t need an estate plan because:

  • “Estate plans are for the wealthy.”

  • “My beneficiaries are listed on my insurance policy.”

  • “I have everything written down.”

  • “My wife gets everything when I die.”

  • “My kids will divide everything up fairly.”

  • “I don’t have anything to leave anyone.”

  • “I have a will and it covers everything I need.”

  • “Everyone knows what I want.”

These are 8 of the many reasons people believe they don’t need an estate plan, presumably, stemming from the idea that the sole purpose of an estate plan is to distribute assets afteryou die. While asset distribution is one purpose of estate planning, a comprehensive estate plan entails much more, to include preparing for a crisis during your lifetime. While each person’s needs differ, here are 8 reasons why every adult needs an estate plan.

GUARDIANSHIP OF MINORS

Most healthy, young, and middle age parents never consider the possibility of not being able to care for their minor children. As a result, they fail to create a valid estate plan to appoint a guardian should they become unable to do so.  Without a will, the court will appoint a guardian. The court’s decision is based on statutory requirements, not the parent’s wishes. Unfortunately, the court appointed guardian may not be the person the parent would have chosen.

ASSET DISTRIBUTION

Many believe that if they’re not wealthy, they don’t need a will because they don’t have anything to leave their loved ones. However, if you own a car, real estate, or any personal belongings of monetary or sentimental value, you have assets. In addition to currently owned assets, an estate plan allows you to name beneficiaries to assets that you may acquire in the future.

Imagine winning the lottery or inheriting a large sum of money or property and dying shortly afterwards. Without an estate plan, the assets will be distributed in accordance with state laws, which may not be consistent with your desires. In addition, a will allows you to disinherit those that may be entitled to assets through the laws of intestacy.

ASSET PROTECTION

A trust can be used in lieu of or in addition to a will to structure assets in a manner that prevents creditors from being able to attach the assets to a liability. A trust allows the grantor to transfer ownership of assets into a legal entity and establish rules regarding the use and distribution of those assets When properly drafted and funded, a trust may be used to, but not limited to:

  • Protect the assets of the grantor’s spouse.

  • Protect and manage the assets of children ill equipped to handle large sums of money.

  • Protect the assets from a surviving spouse’s subsequent remarriage after the grantor’s death.

  • Protect the assets of a child in a divorce to ensure the assets are not included in the divorce settlement.

FINANCIAL MANAGEMENT

A financial power of attorney grants an agent the legal authority to manage the grantor’s financial affairs in the event that the grantor is unable to do so. A power of attorney is effective only during the grantor’s lifetime and unless revoked prior, terminates immediately upon the grantor’s death. Without a power of attorney, the court will likely appoint a conservator. The conservator’s authority and responsibilities are governed by state laws. The conservatorship is subject to court supervision and can be expensive.

MEDICAL DIRECTIVE

A Medical Directive allows you to appoint an agent to make healthcare decisions on your behalf should you become incapacitated. A medical directive allows you to provide detailed instructions regarding the type of care that you do or do not want.

Without a medical directive, family members may have to petition the court to obtain guardianship in order to make medical decisions on your behalf. This process can be costly and potentially destroy relationships. In addition, a medical directive alleviates the stress of loved ones trying make decisions based on what they think you may or may not want. Providing detailed instructions eliminates any doubt.

PERSONAL CARE MANAGEMENT

A personal care plan provides caregivers with information regarding the people, things and activities that are important in your daily routine.  Having a personal care plan can be extremely helpful especially if a nonfamily member will be the caregiver either in home or in a facility because he/she is less likely to be familiar with your preferences. A personal care plan may include, but is not limited to:

  • Medical Requirements

  • Spiritual/Religious Practices

  • Hobbies

  • Favorite Shows

  • Favorite Meals

  • Favorite Drinks

  • Daily Routine

MINIMIZE FEES

The cost associated with the administration of an estate can increases exponentially when you die without an estate plan. Dying without a will can extend the probate process thereby incurring additional fees. Further, when surviving family members are unable to come to an agreement about the administration of the estate, conflict ensues and often leads to costly litigation that may last for years. A well executed estate plan can avoid the probate process and minimize potential litigation.

MEMORIALIZE YOUR WISHES

An estate plan allows you to make well informed decisions regarding your family, your assets and your legacy. A well drafted estate plan minimizes familial discord, provides a peace of mind in knowing that your wishes will be honored and protects your family, assets, and legacy.

Regardless of whether you create an estate plan or not, you have an estate plan. If you choose not to create an estate plan that reflects your wishes, the state has created one for you. Are you going to make the decision to protect your family, your assets, and your legacy or will you leave it to the state?

For additional information, visit www.ReedShermanLaw.com or click here to schedule a consultation.

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