When it comes to estate planning, what’s not done is often the biggest mistake made. Even people who realize the importance of proper planning often don’t have a proper plan in place.
From psychological difficulties in facing one’s own mortality to the more mundane problem of simply finding the time, the reasons people avoid developing an estate plan are as diverse as the individuals themselves. Still, nearly everyone—from the wealthy to those of very modest means—can benefit from a well-designed plan.
Without any estate plan in place, federal and state laws dictate how property, personal items and assets are divided, with no regard to the individual’s wishes. Conflicts due to family issues and legal problems often result, tying up the estate and slowing down the distribution of assets. Additional administrative expenses and taxes, which must be deducted from the estate, can also reduce its overall value before distribution.
While a Will often serves as its cornerstone, a true estate plan encompasses many more facets and presents a broader picture of your current estate and how it might look upon your death.
In many instances, a trust may be created as part of the plan to specify how assets may be managed during life, at death, and even for generations beyond. Other documents, such as powers of attorney and health care powers, which specify who may act on your behalf in legal, financial and medical matters, if you are unable to do so, should be included.
An estate plan can serve as a road map, guiding you to the goals you would like to achieve.
The estate planning process is different for every individual. Not everyone is in the same life stage, nor do they have the same objectives and income needs throughout life. As individuals grow older, their goals may change, but at any stage in life, most individuals want to manage risk, accumulate assets and preserve assets with their estate plan.