It is important to have a plan for your healthcare decisions and who will receive your assets after you pass away – this is generally called estate planning. Your estate plans can include a will, trust, and other instruments that pass your property upon your death. In addition, your estate plans may include health care decision documents. People come up with a lot of excuses to avoid making an estate plan. Below are the top five excuses you can use to avoid speaking to an estate-planning attorney:
Reasons to skip Estate Planning
- Creating family conflict is your favorite pastime.
- You think the state doesn’t get enough of your money now.
- Your kids can totally handle receiving a lump of money in their twenties.
- You plan on living forever.
- You don’t have any assets.
Let’s break these down one at a time to see if any of these excuses will work for you.
FIRST, you like creating family conflict. Some families thrive on disputes. The infighting and breakdown in relationships that can occur in a family after a loved one passes away can be intensified if there is fighting around who gets what assets. It doesn’t matter if the items in question are worth $10 or $10,000.
In your estate plan, you can specify the gifts you want to give to each child, sibling, relative, and charity. A good approach to gifting your assets is to find out who wants specific items and include that into the plan. But if you are the type who likes conflict then stay away from a good estate plan to give your family one last reason to battle.
SECOND, you like paying taxes and don’t thing the state gets enough of your money now. For that reason, you would like to share more with the government after you pass away. You can accomplish this in two ways:
- 1) Leave an estate larger than your estate tax minimum (the federal limit is over 5 million (in 2015) but many states have lower thresholds).
- 2) If you have no living relatives to a certain degree (for example cousins, aunts, parents, grandparents, children, or spouse) and no estate plan, all your property will go to the State. Each state determines what level of relative can claim your property but ultimately, if no eligible relative steps up, the state gets all of it.
There are ways to reduce your estate’s tax burden with proper planning. A good estate plan includes ways you can utilize your money now and save taxes for both you and your loved ones.
THIRD, your kids are more responsible than most and would save all the money you give them when you pass away. You can look to any pop culture magazine or website to see what most teenagers or twenty-somethings do with too much disposable income. Even the most responsible kids can have a difficult time managing large sums of money.
If you have young children or young adult children, you can make a plan that puts the lump sum into a trust. That trust can then divvy money out at specified times or circumstances. This type of plan gives you lasting control over what happens to the money but may hinder your child’s ability to throw one great party for their 25th birthday. If you have minor children who will live with a designated person, (of your choosing listed in the will), a trust can be set up for their care using the proceeds from your estate.
FOURTH, you plan on living forever. While all of us know we will not actually live forever, it is easy to assume there is always tomorrow to work on your estate planning documents. There also seems to be some fear around planning for your death; “if I plan for it, it will come”. Death is inevitable and mostly unpredictable; it is better to be prepared for the security of your loved ones than to put off planning out of fear.
FIFTH, you don’t have any assets. This may be a valid reason to not spend the money on a will or other estate planning document. However, speaking to an attorney about your situation may still be a good idea for a number of reasons:
- 1) You should designate a power of attorney in case you are unable to make your own health or money decisions at some point down the road.
- 2) See “Reason Not to Plan” #1 above. Families fight over assets whether they are worth $10 or $10,000. A small estate plan can be handled by a competent attorney for less money than you think.
- 3) You will want to designate who will care for children if you pass away while they are still minors.
- 4) To discuss all the things you won’t take the time to research on your own and give you advice on how to go about planning.
In general, it is a good idea to speak with an attorney about your assets, what will happen if you pass away with children, tax consequences, and health care decisions. You should also speak to an attorney after any major life events such as the birth of children, marriage, death or divorce.