Estate plans are something that everyone should have, regardless of their financial status. Whether you are young or old, single or married, with or without children, working for someone else or own your own business, you want to ensure that your wishes are heard.
Determining who gets your personal belongings and assets if you die; choosing who will raise your children if you are not there; continuing the business you started in a way you intended; being able to have your affairs continue to be managed if you are suddenly unable to do so . . . these are just some of the reasons for making sure that, throughout any stage of your life, you will want to have a well thought and properly put in place estate plan.
When thinking of this, you my want to ask yourself the question, “Well, what happens if I don’t have an estate plan”?
Who inherits my assets?
With an estate plan in place: You choose how your assets and personal belongings will be distributed.
You can have it all go to one person, such as your spouse or a child, or divided up among several people, in any manner that you decide is best. You can also designate specific items (like your wedding ring) to go to a specific person who you feel would be the best person to get it. You can also leave all or part of your estate to a charitable organization or other good cause if you so desire. If you own a business, you can set out how your business is to be distributed and even delineate how it can survive into the future.
Without an estate plan in place: The State you live in or own property in will decide who gets your assets and personal belongings and in what manner.
It is predetermined by each State’s particular laws (which can differ) by a system known as “Intestate Succession” and goes down a list of family members and relatives to determine where the property goes. Only the people that the State decides from that list will inherit, and no one else will get anything. If you die without any family members or relatives on that list, the property goes to the State.
Who raises my children?
With an estate plan in place: You name who you want to be the guardians of your children.
If you have minor children or are considering having kids, picking a guardian is incredibly important and you want to make certain that the individual or couple you choose shares your views, is financially sound, and is genuinely willing to raise children. As with all designations, a backup or contingent guardian can be named as well.
Without an estate plan in place: A judge will determine who should be the guardian of your children.
Without an estate plan designating who you want to raise your children, a court will have to step in and decide who should raise your children. Unaware of your particular situation, beliefs, or intent this person could rule that your children live with a family member you wouldn't have selected. And in extreme cases, the court could mandate that your children become wards of the state.
Who makes sure my estate is properly managed?
With an estate plan in place: You name who you want to be the executor of your estate.
You decide who will wind up the affairs of your estate. Executors make sure all your affairs are in order, including paying off bills, canceling your credit cards, and notifying the bank and other business establishments. Because executors play the biggest role in the administration of your estate, you’ll want to be sure to appoint someone who is honest, trustworthy, and organized (which may or may not always be a family member).
Without an estate plan in place: A judge will determine the executor of your estate.
Without a will, there is no sure way to know who you would have chosen as executor. But someone must have authority to take charge of your property and debts, which means that the court will have to choose someone to fill this role and it may be a person chosen who you would not have wanted it to be.
What happens if I become incapacitated?
With an estate plan in place: You name who the person who will manage your affairs while you cannot do so.
Estate planning is not just about death. It’s very common for people to become incapacitated by an accident or sudden medical episode – like a stroke – that leaves them unable to manage their financial affairs. If this happens to you, who will take care of paying your bills or managing your healthcare? A power of attorney designation for both financial and healthcare decisions can save your family a lot of time and money and make sure everything is handled according to your wishes.
Without an estate plan in place: Others will need to go to court and ask to let them make these decisions. This is a costly, slow and sometimes acrimonious process, especially if those who want to make these determinations do not agree with each other how they should be made. Inevitably, again it is the court, not you who is deciding on what is best for you.