A friend’s father died with $1.2 million in assets—and no will. The father hadn’t updated beneficiary designations since the 1990s and had no power of attorney documents or trusts. According to the article “The Estate Planning Mistake That Could Leave Your Family With Nothing,” from NTD, his ex-wife and not his partner of 14 years was the sole beneficiary on his life insurance policy and retirement accounts.
The woman who had been by his side for 14 years and cared for him throughout two years of illness received nothing. His adult children were involved with probate court for more than a year. The legal fees and stress were enormous. Family relationships were destroyed.
Here’s the irony: he wasn’t an irresponsible person. He had a good investment portfolio, had bought life insurance and worked with a detailed budget. Like so many others, he simply procrastinated about estate planning. He thought he had time to get to it, even after he became ill.
Why do smart people skip estate planning? The answer is obvious; no one wants to think about dying or becoming incapacitated. It’s difficult to confront our mortality. So, we postpone it. Common reasons are that we’ll do it when the children are older, when we have more money, when we are “ready.” However, waiting until you are ready is never a good idea.
Without a comprehensive estate plan, created by an experienced estate planning attorney, your family will be faced with an avalanche of financial, legal and emotional stressors at a time when they are grieving.
Estate planning is not complicated when the right professional is involved. It comes down to five key documents:
The will. This is the foundation of an estate plan and directs what should happen upon your death. It names who will take care of your children—the guardian—and who will oversee managing your estate—the executor. Without a will, your state has inheritance laws that typically follow kinship relationships. A sibling you may haven’t spoken to in decades might inherit everything. Your surviving spouse might receive only half of your assets while children, whether they are minors or adults, may receive equal shares of whatever’s left.
A durable power of attorney. Estate planning includes planning for incapacity, when you cannot communicate your wishes because of injury or illness. You give the power to someone you trust implicitly to manage your financial affairs, from paying bills to making investments and selling property. Without this document, your family will need to petition the court for conservatorship, which can take months.
A healthcare power of attorney. This names someone to make medical decisions if you are incapacitated. Without it, family members may not be able to be involved with care. The doctors will be legally barred from making decisions you might have wanted.
A living will or advance directive. End-of-life care is as difficult to think about as dying. However, with this document, you can outline your wishes for end-of-life care. Do you want to be given food through a tube if you can’t eat? Do you want aggressive treatment to keep you alive, or would you rather have palliative care? Putting these wishes into legal documents will prevent loved ones from having to guess what you would have wanted.
A trust, revocable or irrevocable. Having a trust depends upon your situation. Putting assets into a trust allows assets to pass to beneficiaries without going through probate. It can save months of delay, keep your affairs private and allow you to control how you want assets to pass to heirs.
Talk with an estate planning attorney who will teach you more about these five documents, explain what your situation calls for and create an estate plan to protect you and your loved ones.
Legacy One Law Firm, APLC is an estate planning and probate administration law firm in Los Angeles, California, serving families throughout the State. We help individuals and families establish living trusts, wills, powers of attorney, advance healthcare directives, and other essential estate planning documents designed to protect their loved ones and preserve their legacy. Schedule a quick and easy consultation with estate planning attorney Sedric E. Collins, Esq., or call 323-900-5450.
