Why Do I Need An Estate Plan?
Many people are quick to dismiss the need for an estate plan. They might make excuses like, “I’m too young to need one”, “I don’t have many assets”, or “It’ll all go to my spouse and kids anyway so what’s the point?” The reality is, that everyone should be prepared with a complete estate plan. Your estate plan can help protect your assets while you are still alive, ensure the people who inherit your property can do so without issue, and provide for your loved ones. Stop making excuses and consult with an experienced estate planning attorney today to determine what might be best for your needs. A good estate-planning attorney will not try to sell you on a complicated plan that you do not need but will assess your goals and interests to create a plan that meets those needs.
While every person or family is different, there are common themes that trigger the need for estate planning. We will review some of the more common needs, but talking with an attorney about your specific circumstances can ensure you are properly prepared and protected.
Why do I need an estate plan if I’m single?
A single person might think that because they do not have a spouse or children to provide for, a will or estate plan is not necessary. Unfortunately, that is not the case. If you pass away without a will and you are unmarried and without children, your estate will pass based upon intestacy law, which would mean to your parents, or, if your parents are no longer living, to your siblings. For some, this might be the plan they would choose anyways, but for others, it might not be. Creating a will ensures that your property will pass to the people you would choose, perhaps you have nieces and nephews to provide for, or maybe a charity you’d like to support? Taking time to think about this is critical and delaying just because you are single may not be in your best interest.
Another excuse for putting off estate planning could be that you might not think you have sufficient assets that a will is even necessary. While you might still be building your financial future, you still want to be certain that it would be devised for the appropriate people. A good estate plan can grow with you as your financial picture changes. You may not own a home when you execute your will, but it could still provide for how future real estate should be distributed upon your death.
Additionally, if you are single, it is critical to ensure you have a medical and/or financial power of attorney in place. What would happen if you were unable to manage your health and finances? Who would you want to make those decisions? A married couple often can address these concerns via joint accounts or other means, but a single person should give special consideration to not only what would happen if they pass away, but also, what would happen if they become incapacitated.
Why do I need an estate plan as a new parent?
As an estate planning attorney, clients contact me about estate planning when they have children. Caring for your children brings the future to the forefront and most parents want to ensure their children are cared for, even if the worst should happen. It is especially important to create a comprehensive estate plan if you have children who are minors. You need to consider who would take care of the children in the event both parents passed away. No one wants to think of this situation but is an important conversation for you and your spouse. Most parents are reassured knowing there is a plan in place and their children will be taken care of.
Planning for your children’s financial future is just as important. Under Pennsylvania law, minors (anyone under 18) cannot inherit directly. This means that if you don’t have a will and you and your spouse both pass away, your children would receive everything. Unfortunately, the money cannot just be transferred to an account in their name, because they are minors. Instead, the court would need to get involved, there would likely need to be a guardianship entered and the court may have additional control and/or oversight over these funds.
A solution is having a minors’ trust in your will and providing that any bequests made to minors be placed into the trust, rather than distributed outright. You can then decide who you would want to act as the trustee and manage those finances until the children are no longer minors. In a minor’s trust, you could also provide that rather than distribute all of the money at 18, you could provide for smaller distributions over time. While you cannot distribute funds to anyone under 18, you could raise that age and state that minors would not receive their share until age 21 or even later.
Crafting a good estate plan can help protect young children and give parents peace of mind.
Why do I need an estate plan if I’m retired?
Typically, by the time most people reach retirement, they have looked into estate planning, even if they do not have the documents in place. Retirement can be a great time to reevaluate your finances and be sure you are protected moving forward.
If you already have a will or other estate planning documents, retirement might be a great time to review those documents and determine if they still line up with your wishes. You may decide on a different beneficiary structure, or maybe you need to list a new executor or trustee? Perhaps you had a minors’ trust set up when your children were younger but now that need has changed? Any time there are life changes like marriage, divorce, or large changes in your assets or finances; this is an excellent time to review your estate planning documents.
It can be as simple as pulling them out of the dusty envelope and reading through everything, or you may want to speak with an attorney to have some updates made or new documents drafted.
At the time of retirement, you may be reviewing beneficiary designations on accounts or considering downsizing and selling a home. All of these changes might impact your will or other estate plans, so reviewing these documents is critical. A good estate plan is set up so it can grow with you, but if there have been significant changes during your life it might be wise to update or revise the documents.
Why do I need an estate plan if I have a blended family?
There is no such thing as a “typical” family. Each family is unique and their estate planning needs can be varied. For “blended” families with perhaps stepchildren and/or biological children of both spouses, talking about an estate plan is critical. Without a will, the law may not provide that stepchildren would inherit from a stepparent. Another consideration is how both spouses’ wills would work together. Many couples draft wills where when the first spouse passes away, the entire estate goes to the surviving spouse. Meaning that the will of the surviving spouse is in control. Therefore, if the two spouses have very different wills, only one distribution scheme will be followed, put another way if they each have children from a prior relationship, it is a very real possibility that only one set of children might inherit. Again, these are all issues that an experienced attorney would consider and discuss with the clients to ensure all of their wishes are effectuated, and, perhaps most importantly, that they have considered different possibilities.
A blended family might have unique needs that other families may not. The spouses may have a specific idea of how property will be distributed or how the proceeds of the estate would be handled. Without a will setting forth these desires, intestacy law would control which might look very different from the person’s intentions. Taking time to craft an estate plan that addresses your goals and concerns will prevent issues down the road or any surprises when someone passes away.