The short answer to “Do you need a Will” is yes. The better question is whether you need an estate plan. An estate plan is a comprehensive written plan that outlines your wishes and requests regarding your property once you pass away. An estate plan is your legacy in writing. A Will is one piece of the estate plan. You must also consider:
(1) The titling of assets, such as joint tenants, transfer or payable on death, and beneficiary designations on life insurance and retirement plans;
(2) Appointing a Personal Representative or Executor to administer your estate under a Will and/or Trust;
(3) Appointing an Attorney-in-Fact (Agent) to assist you with your financial assets under the estate planning tool, Power of Attorney (POA); and
(4) Appointing a Health Care Agent to handle all of your medical and health care decisions, i.e. organ donation, cremation or burial, and end of life choices.
An estate plan will include each of these considerations in one comprehensive compilation of documents. An estate plan typically consists of a Will and/or Trust, a Health Care Directive, also known as a Living Will, a Power of Attorney form (POA), and a beneficiary designation form.
Putting your legacy in writing helps to alleviate any problems that may arise when people die. When a person dies without an estate plan, your property can be inherited from anyone who is an heir under state law. The legal heirs are those who inherit your property after your death. Typically, heirs under state law are your next of kin.
By creating an estate plan now, you avoid potential conflicts down the road, and save both time, money, and mental anguish your loved ones have to deal with if you passed suddenly or unexpectedly.
Key Questions to Consider when Crafting an Estate Plan:
(1) What property do you own?
The most common types of property people own are real estate, vehicles, bank accounts, and investment accounts. If, in the aggregate, all your property is more than $75,000, it is recommended to create an estate plan.
(2) Who are your heirs?
Are you married? Have you been married before? Do you have children, nieces, nephews, siblings, parents? State laws automatically have your property going to your next of kin. You can change the default for how you want your property to pass by creating an estate plan.
(3) Who do you want your property to go to?
Do you have a life partner? Or a close friend that is closer to you than your next of kin? Are you married for the second time? You should consider crafting an estate plan to ensure that your wishes are fulfilled when you pass away.
(4) Do you have family members that are hostile toward one another?
If family members do not get along and you pass away without any estate planning tool, the stress of your death and the existing hard feelings could create enormous conflicts and disharmony among family members. Beneficiaries may believe they are not getting their fair share and try to battle the issue through the court system. Often, these types of legal battles deplete the property that you leave to your beneficiaries. Having a comprehensive estate plan in place helps to avoid these types of issues.
Common Scenarios when an Estate Plan is Beneficial:
There are many varied scenarios where you should consider creating an estate plan. Some of the most common scenarios include:
- You are married for the second time or contemplating a second marriage. In second marriages, spouses often have their own assets and children from previous marriages. This may cause conflict amongst stepchildren in how they will inherit from their parent’s estate. If their parent’s assets are commingled with the stepparent, there is the potential risk of the children not inheriting from their stepparent.
- You have minor children. When young couples pass away with children, determining who will take care of their children is a very important decision, and so too is who will take care of your assets until your children become adults. If you wait until you die for others to make that decision, such as a court stepping in, it could be stressful and painful for your family members.
- You have one person who is primarily responsible for family finances. If one spouse was the primary caretaker for the family finances, having an estate plan if one spouse unexpectedly dies will assist the surviving spouse in knowing how to administer the estate.
- You have a dangerous hobby or occupation, or a terminal illness. If a loved one cannot make their own health care decisions, an estate plan will appoint someone to make health care decisions for that person. One can appoint a health care decision maker before they become incapacitated. This decision can be especially difficult for loved ones if there is no estate plan in place. An estate plan can also include a health care directive, which will outline your wishes such as if you would like to donate your organs, if you would like to be cremated, and what measures physicians should take in the event you are incapacitated.
One of the most caring things you can do for your family is to plan well and provide clear communications surrounding your wishes. At Kennedy & Ruhsam Law, we provide caring and practical expertise built on decades of service to families in the areas of estate planning, probate, tax, and business law. Contact our office at (651) 262-2080 or via email at firstname.lastname@example.org.