The New Year is a time to think about what you want to accomplish, you look towards the future. While your goals to get healthy and go to the gym every week may have started to fall away, you can still accomplish something that should be on everyone’s resolution list – evaluating or creating your estate plan.
There are many reasons you may not have contacted an estate planning attorney yet. You’re not alone. In 2015, Caring.com issued a study which found that 44% of Americans do not have a will. Below are six common reasons people may not have an estate plan in place. But don’t let these excuses get the best of you. The benefits outweigh the excuses and you will feel a sense of confidence and relief knowing your estate plan is in place.
1. You are too busy.
Being busy is the reality of being an adult. Working at least 40 hours a week, caring for your family, these things take precedence. However, planning now for how your estate will be administered will help to reduce the burden on your loved ones and can help you to plan for the potential of incompetence when you reach old age.
2. You don’t know where to start.
What even goes into an estate plan anyway? Who should you name as a guardian? These are important questions to consider and they absolutely should be answered in your estate plan. But you are not sure where to start, you have more questions than answers. The first place to start is in a consultation with an estate planning attorney. You will discuss your assets, your family, and your goals in a consultation. An estate planning attorney gets to know you and what you want; only then crafting an individualized estate plan tailored to your needs.
3. You think your estate isn’t big enough.
The Tax Cuts and Jobs Act of 2017 raised the Federal estate tax threshold allowing Americans to pass up to $22 million (for married couples) of estate property to their heirs until January 1, 2026. On that date, the threshold reverts to the prior level of roughly $11 million. It is easy to think that with the doubling of the threshold, that you have no need for an estate plan since your estate is nowhere close to $22 million. While it is true that even under the prior threshold 99.8 percent of estates were not affected by the estate tax, there are still plenty of important reasons to establish an estate plan such as planning for incompetency and ensuring your estate is given to the people you want it to go to.
4. You have life insurance; what else do you need to do.
This is something many people believe. Either personally or through your employer, you have established life insurance policies and have chosen beneficiaries. This is technically a part of estate planning. In fact, completing the task of properly designating beneficiaries to your life insurance policies is just the beginning of a basic estate plan. But that’s just it – it’s one small element in the larger plan you need to consider. Not every asset in your estate will cleanly transfer in the way a life insurance plan does. Personal property, real estate, etc., do not, by default, automatically transfer at death. Instead, probate may be required in these cases; and, without at least a will, the state determines who receives which property under Intestacy laws.
5. Estate Plans are complex and expensive, and you don’t have the time or the budget.
It is very true that estate plans can be complicated, but the reality is they are only as complicated as you make them. This does not mean that an estate plan should never be lengthy or consist of multiple documents. It is important that your estate plan is complete. At a minimum, this means you should have a will, durable power of attorney, and health care power of attorney. Depending on your situation and needs, a trust could (and should) be added to a basic estate plan. The most important and valuable thing you can do to is to spend time discussing your options with an estate planning attorney to explore all options that are available to you and chose the best option for your goals.
6. You don’t want to talk about death.
It’s true that death is one of those things we tend to avoid at all costs. No one likes to think of what it means. It’s understandable. Death is painful, death is emotional, death is final. Death is not something we can control, but estate plans are. Having an estate plan in place allows you to control some aspects of your life. You can name guardians for your children, rather than relying on a Clerk of Court making the decision for you. Estate plans allow you to dictate how and when your loved ones receive property from your estate allowing you to provide for the years after your death.
I recently read Chip Gaines’ (of Fixer Upper fame) book, Capital Gaines, and one passage stood out to me:
While your potential incompetency and eventual death are things you absolutely cannot control, an estate plan is something you can. Having an estate plan in place allows you to prepare against the worst-case scenario and allows you to provide for your loved ones. The reality is, estate planning is not really about death, but about family. Resolve to complete your estate plan this year to protect your family.