Many
people think that estate plans are for someone else, not
them. They may rationalize that they are too young or
don't have enough money to reap the tax benefits of a
plan. But as the following list makes clear, estate
planning is for everyone, regardless of age or net
worth.
1. Loss of capacity. What if you become
incompetent and unable to manage your own affairs?
Without a plan the courts will select the person to
manage your affairs. With a plan, you pick that
person through your durable power of attorney
2. Minor children. Who will raise your
children if you die? Without a plan, a court will
make that decision. With a plan, you are able to
nominate the guardian of your choice.
3. Dying without a will. Who will inherit your
assets? Without a plan, your assets pass to your
heirs according to your state's laws of intestacy (dying
without a will). Your family members (and perhaps not
the ones you would choose) will receive your assets
without benefit of your direction or of trust
protection. With a plan, you decide who gets your
assets, and when and how they receive them.
4. Blended families. What if your family is
the result of multiple marriages? Without a plan,
children from different marriages may not be treated as
you would wish. With a plan, you determine what
goes to your current spouse and to the children from a
prior marriage or marriages.
5. Children with special needs. Without a
plan, a child with special needs risks being
disqualified from receiving Medicaid or SSI benefits,
and may have to use his or her inheritance to pay for
care. With a plan, you can set up a Supplemental
Needs Trust that will allow the child to remain eligible
for government benefits while using the trust assets to
pay for non-covered expenses.
6. Keeping assets in the family. Would you
prefer that your assets stay in your own family?
Without a plan, your child's spouse may wind up with
your money if your child passes away prematurely. If
your child divorces his or her current spouse, half of
your assets could go to the spouse. With a plan,
you can set up a trust that ensures that your assets
will stay in your family and, for example, pass to your
grandchildren.
7. Financial security. Will your spouse and
children be able to survive financially? Without
a plan and the income replacement provided by life
insurance, your family may be unable to maintain its
current living standard. With a plan, life
insurance can mean that your family will enjoy financial
security.
8. Retirement accounts. Do you have an IRA or
similar retirement account? Without a plan, your
designated beneficiary for the retirement account funds
may not reflect your current wishes and may result in
burdensome tax consequences for your heirs (although the
rules regarding the designation of a beneficiary have
been eased considerably). With a plan, you can
choose the optimal beneficiary.
9. Business ownership. Do you own a business?
Without a plan, you don't name a successor, thus
risking that your family could lose control of the
business. With a plan, you choose who will own
and control the business after you are gone.
10. Avoiding probate. Without a plan,
your estate may be subject to delays and excess fees
(depending on the state), and your assets will be a
matter of public record. With a plan, you can
structure things so that probate can be avoided
entirely.
