Did you know more than half of all Americans don’t have a will? Right now you might be asking yourself: “do I need a will?” If so, you clearly aren’t alone.
The last thing most people want to think about is their own demise. Perhaps that is why, according to a 2017 survey by caring.com, almost 60% of Americans have yet to legally document their end-of-life wishes via a will and other end-of-life legal documents, a formal process called estate planning. The unfortunate irony is that, unlike other areas of financial planning, the question of whether you need a will is relatively straightforward. And it usually only costs a few hours of your time (with an attorney) and a few hundred bucks to get it done, which is a small price to pay when you think of the piece of mind you and your loved ones get in return.
There are three main goals of estate planning. In no particular order, an estate plan will lay out:
1.) How your assets are to be distributed and managed after you die (through a will and also possibly through trusts, depending on the complexity of your situation).
2.) Who is allowed to make financial and health-related decisions in the event you become incapacitated (called a Power of Attorney and a Medical Power of Attorney, respectively).
3.) The types of medical treatment you wish (or do not wish) to receive in the event you become terminally ill, and whether you would want to be kept on life support (called a Living Will; oftentimes a Living Will and Medical Power of Attorney are collectively referred to as an Advanced Medical Directive).
To make things easy, ask yourself the following questions. Chances are you will answer “yes” to at least one. If you answer “yes”, it’s time to set up an appointment with an estate attorney ASAP. Because without legal estate documents, state law will dictate these decisions for you.
“Do I need a will?” checklist
- Are you married?
- Do you have kids?
- Do you want your kids to have an inheritance? If so, should it be split evenly?
- Do any of your kids have special needs?
- Are you worried one (or all) of your kids aren’t responsible enough to handle large sums of money?
- Would you rather leave some (or all) of your money to a university or charitable entity?
- Do you have both biological children and step-children from multiple marriages? How should an inheritance be divided between these children (if at all)?
Recall, over half of Americans do not have a will. However, it’s probably a safe bet to say the vast majority of those people actually do need a will. So what gives? Why do so many adults live in seemingly-ignorant bliss over something that has the potential to unravel an entire family? Well, like many things in life – if it’s easy to do, it’s also easy to not do.
Here are the most notorious excuses:
“Estate Planning is only for the rich and famous”
Wrong, wrong, wrong!
If estate planning was only for the uber-rich, then how can you explain why celebrities such as Aretha Franklin, John Denver, and Prince (just to name a few) all died without basic estate documents in place? Even Abraham Lincoln – who was a lawyer by trade – did not have a will! Something doesn’t add up.
“I just haven’t had the time. I’ll do it later”
Time is one of our most valuable resources these days. Life gets busy. We get pulled in a hundred different directions.
But accidents happen. There are many non-money related reasons why having an estate plan is a smart move.
For instance, consider what could happen if you were left in a coma following an accident. Without a Power of Attorney, no one could make financial or medical decisions in your place until it goes through the proper legal channels. As you can imagine, this is not a quick process and could be a waste of precious time during an emergency.
Or even worse, what if that accident left you terminally ill, with no hope of recovery. Would you want to be kept on life support? Are there certain medical treatments you would (or wouldn’t) want to receive? Without an Advanced Medical Directive, your family and health care providers will not have answers to these questions. Remember Terri Schiavo? This exact situation sadly resulted in a 12-year legal battle between Terri’s husband and her parents over what she would have wanted.
Going one step further, what if you and your spouse were in a serious accident. Who will take care of the kids? Unfortunately, the options are black and white: you either proactively decide yourself (in your will) or state law decides for you. And the state may or may not make the decision you would have wanted.
Death is inevitable, and accidents are unpredictable. So do right by your family and visit an estate attorney before it’s too late.
If you already happen to have estate documents in place, it is generally wise to revisit your plan following major life changes such as marriage, births, and divorce. Life changes, so a plan that was relevant 20 years ago may no longer make sense today.
While meeting with a lawyer is hardly a fun experience (especially when death is the topic), an hour or two of temporary discomfort should ultimately lift a gigantic burden off your shoulders – one that you may not have even realized was there. That’s a pretty good trade-off if you ask us.
So to conclude, if you’re asking yourself “do I need a financial plan?” – chances are very high the answer is YES. Don’t wait any longer to get it done!
A big part of estate planning (and financial planning in general) is just getting organized. Keeping your financial affairs organized and easy-to-follow can provide your loved ones comfort, guidance, and direction during an otherwise challenging time like death or an emergency.
Have questions about how an estate plan impacts your financial strategy? Set up a consultation today.
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