Americans Dying With No Plan In Place
Americans have their heads in the sand when it comes to estate planning, according to surveys by LexisNexis and LegalZoom.com which estimate that 55 percent of adults have no will or other estate plan in place[1].
Several high profile deaths among celebrities his past year have reminded us of the very human tendency to put off and ignore the inevitable: specifically, that each and every one of us will one day cease to be alive, and that the people we leave behind will be forced to pick up the pieces whether we plan for them or not.
What "dying intestate" means
"Intestate" is the term that lawyers use to refer to the situation when someone dies without any estate plan. If you die without a will, there’s no guarantee who will inherit your assets. Your estate must go through probate, a costly, slow-moving process the courts use to identify and re-assign assets to heirs. If you're married with kids, generally speaking, your surviving spouse and children should inherit whatever you leave behind. If you have minor children, the state will choose their guardians, and without any documentation you leave behind on the subject, it will do so without your guidance. If you are single and childless, the state will determine which of your relatives will inherit your assets and property. While it's true you won't be around at the time, this process may not end with the result you would have intended or preferred, which is why planning ahead is so important.
"...when the time arrives, as it must for each of us, whatever you've left undone, must remain so."
Most people, when asked, say that they'd prefer to simplify and reduce the hardship on their loved-ones of administering an estate, and most prefer to specify where their assets go instead of just hoping that a court gets it right.
When to consider a trust
While everyone should, at a minimum, have a basic will in place, there are some risks to using this for your entire estate plan. Some people also choose to set up trusts before their deaths as vehicles for achieving their estate plan. The major benefit of a trust, which can be either revocable or irrevocable, is that the assets do not have to go through probate court. Similar to a will, a trust document also details how you want your assets distributed upon your death and how to take care of your minor children financially.
As the creator of your trust, you also appoint a trustee to carry out your wishes. In addition to keeping your affairs more private and avoiding expensive administration costs, a trust can allow more flexibility to help address the impact of estate taxes and allow some discretion in how assets are transferred after your passing to ensure your wishes are met in the most cost-effective manner.
The most important part of your plan -- is to have a plan
By ensuring you have a good estate plan in place, you’ll rest easier knowing that you’ve taken care of your loved ones when and if you are unable to do so. There are different reasons why a person would want to use a simple will or a trust, and the optimal plan should be designed in consultation with your attorney and financial advisors. Trusts and wills are not necessarily mutually exclusive and depending on your specific needs, having both may be appropriate.
What is most important, however, is to not delay putting a plan in place. Death is certain, only its time is not. And when the time arrives, as it must for each of us, whatever you've left undone, must remain so.
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Footnotes:
[1] Statistics on Last Wills & Testaments, info.legalzoom.com, LexisNexis survey, 2014.
See Disclosures.