Failing to plan for the inevitable can cost your loved ones dearly. An estate plan outlines your final wishes and sets forth the legal proceedings of distributing your assets. Without one, you leave not only a mess for your family to sort through, but potentially high costs and even the government being the ultimate decider of your estate.
Don’t do that! At the very least, even if you don’t like your family, leave all of your assets to an old friend or charity. I’m just kidding there – I’m sure you care for your parents, siblings, kids, nieces & nephews – and they all want their cut. Maybe they are not quite that greedy but imagine how beneficial it would be to, say, a grandchild or niece/nephew who is saddled with tens of thousands of dollars of newly-minted student loan debt – to have that partially or in-full paid off from a generous inheritance. We can help craft that blessing.
But what if you aren’t intentional about creating a proper estate plan? Bad outcomes – that I can assure you. There are countless examples of family in-fighting due to a wealthy decedent’s assets not having a plan for distribution. Here are five negative repercussions to not having an estate plan:
1. Probate: What is that? It’s when the government decides where your assets will go upon your passing. Without a last will and testament, this can happen. In most states, if you are married, and you are the first to pass, then all assets go to your spouse – easy peasy. But if you are not married, or if your spouse has already died, then it can quickly get complicated. Probate is not only legally cumbersome, but it can also be costly. And consider that the distribution of assets is made public for the world to see. I know I wouldn’t want that – would you?
2. Family strife: It may seem trite and overly detailed to tell your heirs who will get the old grandfather clock, but be sure to put it in writing. It is better to be more detailed than not as you never know what items your family members want as a personal memento and keepsake. If you don’t specifically itemize your assets and who gets what, disagreements may arise during an already stressful time.
3. Expensive: Without a proper plan in place, your heirs may have to hire an expensive lawyer to help sift through the distribution of assets and file probate.
4. Taxes: But the bigger cost could be taxes. Tax strategies as it pertains to proper estate planning could be its own white paper, but just know that taking a few hours with us to craft your plan may save you and your loved ones thousands of dollars or more.
5. Time: Without an estate plan set in stone, your heirs will have to spend countless hours figuring out (speculating) what your final wishes were. Then once they have settled on where things should go (if they are lucky enough to ‘settle’ on it), then they must work together to distribute everything. But aside from your assets, even planning your funeral last minute can be a major undertaking (pardon the inappropriate pun!). More hours of work and more stress there.
I’ve talked about a lot of items relating to not having a will. But that’s not all an estate plan is. An estate plan is an all-encompassing framework for minimizing costs, efficiently distributing assets, and maximizing generational wealth. It includes a will, no doubt, but other items include insurance, trusts, naming an executor of your estate, perhaps dictating legal guardians for your kids, naming beneficiaries on IRAs & insurance policies, setting up funeral arrangements, heck even writing down what you’d like to wear in your casket (to get ultra-morbid).
Without proper risk-planning, and that is really what an estate plan is, you leave the door open for Uncle Sam to barge in, and swipe away a significant portion of what you worked so hard for over your lifetime. There are smart strategies we can deliver that can save you significantly when “your will matures” to use an industry euphemism.
Here’s the point
- Look, nobody likes to talk about setting up a good estate plan (except for yours truly) let alone planning for the inevitable, but it’s the responsible thing to do
- What happens if you die without a plan? Emotional struggles, family in-fighting, confusion, stress, potentially major financial costs – to name a few.
- A good estate plan makes things easy for your loved ones during a period of stress and heartache
Action items
- Put time on your calendar to sit down with us to craft your estate plan. Be intentional about it – don’t just say “oh, I’ll do that when things calm down”. No excuses!
- Trust our expertise. Risk management is perhaps the most important aspect of solid financial planning practices. We can optimize your assets using tools and strategies which that crazy ole outfit called the IRS has allowed for.
- Update your plan. Already have an estate plan? Excellent. Just like changing out the batteries in your smoke detectors, be sure to regularly check on your estate plan documents to ensure everything is still up to snuff and the way you want everything to go once you kick the bucket.
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This was Blog Post # 4 in our Estate Planning Series. Make sure you circle back to check out all the posts in this series if you have not yet had the chance to read them!
Estate Planning Series Post #1: What is Estate Planning?
Estate Planning Series Post #2: Establishing an Estate Plan: What is the process?
Estate Planning Series Post #3: What Age Should You Start to Consider Estate Planning?
Estate Planning Series Post #4: What is the Difference Between a Will & a Trust?
Estate Planning Series Post #5: How to Protect Assets in the Event of Sickness or Death?
Featured Image: Photo by Melinda Gimpel on Unsplash