Who Needs a Will Anyway: Why Estate Planning is so Important
As the saying goes, nothing is certain in life but death and taxes, and estate planning encompasses both. Despite this certainty, many of us avoid thinking about the end of our life and neglect making an estate plan. There are things you can do now that can save you, your spouse, and your loved ones a lot of trouble and aggravation.
Lifetime Documents: The Impact of Powers of Attorney and Living Wills
Estate plans almost certainly will include a durable power of attorney for finances and property and a power of attorney for healthcare, as well as a living will. The concept behind a power of attorney is that it gives an agent identified by you, someone you trust and with whom you communicate well, the legal authority to act as you would. This comes into play when you are unable to act for yourself, such as when you are physically or mentally incapacitated.
A durable power of attorney for finances and property gives your agent authority to manage finances and tasks related to your belongings or property on your behalf. This includes tasks such as writing checks and signing documents. A healthcare power of attorney gives the agent authority to make healthcare decisions on your behalf, after two physicians have declared you to be incapacitated. In either case, the agent has a duty to act in good faith to make decisions on your behalf that align with decisions that you would have made for yourself if able and are in your best interest. Finally, a living will provides instruction to health care providers regarding your care. For example, you can designate whether you would like life-sustaining procedures if you have a terminal illness or are in a persistent vegetative state.
Without power of attorney documents, if you are unable to make decisions or take care of your finances, your spouse or loved ones will need to file for a guardianship to handle your finances and health care decisions. This is a time consuming and costly proceeding. In it, a court will appoint a guardian to make these decisions for you. Powers of attorney give you the power to direct who will handle your health care decisions and financial decisions – not a judge.
Dying Without a Will: What Happens to Your Estate?
If you die without a will, state law will dictate what happens to your belongings and assets (your “estate”). Dying without a will is also known as dying “intestate.” Intestacy laws outline who gets your property. Generally, spouses are first, though if you have kids from a prior relationship, your estate will be split – half to your spouse and half to your children. This split can be further complicated by what is determined to be your martial property and what is determined to be your individual property. If you do not have a spouse or children, your estate will go to your parents, if living, and to your siblings if your parents are not alive. The intestacy laws do not provide for tensions or estranged relationships; legal heirs are determined solely by familial relationships. So, for example, if Jack dies without a spouse or children or surviving parents, and no will, a share of his estate will go to his estranged sister, Jill, despite this being against the last thing he would want.
In addition to having no control over where your estate goes when you die without a will, your heirs will have to open probate proceedings to administer your estate and get their share of your assets. Probate proceedings can be lengthy, and the court takes a small percentage of the estate as a filing fee. Many people take steps to avoid probate, but the process is unavoidable if you die without a will and you have assets that remain titled in your sole name.
Why Hire an Estate Planning Attorney?
With a variety of self-help estate planning resources available online, some people question whether consulting with an estate planning attorney is necessary. The reality is, there is no one-size-fits-all for estate planning, so self-help estate planning does not always work for everyone. For example, planning may look different if you have minor children, a second marriage, a complex set of assets, a large-valued estate, or if you have a complex plan for distributing your assets after you die. Additionally, an estate planning attorney can advise you on the best plan for your circumstances, whether you have a straightforward set of assets or a very complex family or estate.
At Axley, we strive to create an estate plan for you that balances simplicity and sophistication, and only recommend the tools needed to achieve your goals. If you are in a place to tackle your estate plan or would like to revisit your current estate plan documents, Axley’s estate planning attorneys are ready to assist.
