Leisl L. Langevin, CFP®, CDFA®
Senior Vice President & Financial Advisor
People often think of estate planning as something you do “when you’re older.” The truth is that the consequences of neglecting to write a will can be problematic, even disastrous, for your loved ones no matter what your age or how modest your means.
And yet, according to Caring.com’s 2022 Annual Will Survey, only 33% of Americans have a will. That percentage is even lower for 35 to 54 year-olds – just 23%. That means that 77% of Americans 35 to 54 are putting their families and other loved ones at risk.
If you want to avoid doing the same, here’s what you need to know.
1. You Have an Estate (Even If You Don’t Think You Do).
It doesn’t matter how limited (or unlimited) your means may be, and it doesn’t matter if you own a mansion or a motorhome. Whether you’re considered wealthy or of modest means, when you die you leave behind an estate. For some, this can mean real property, cash, an investment portfolio, or other investments. For others, it could be as straightforward as the $10 bill in their wallet and the clothes on their backs. Either way, what you leave behind when you die is your estate.
2. Without an Estate Plan You Could Be Leaving Lots of Headaches for Loved Ones
You might be wondering, “If my estate is small, should I still have an estate plan?” Well, think about it. Even if you’re just leaving behind the $10 bill in your wallet, who will inherit it? Do you have a spouse or children? Is it theirs? Should it go to just one of them or be split between them? If you don’t decide, you could potentially leave behind a legacy of legal headaches for your survivors.
Estate planning is about deciding how what you have now (money and assets) will be distributed after your death, and it’s the last thing you’ll be able to give to your loved ones or contribute to the causes you care about. Creating an estate plan may give you the comfort of knowing that your wishes will be carried out when the time comes.
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3. Without A Will, The State Will Make Your Decisions for You After You’re Gone
Every day, people die intestate. In a legal sense, this means without a will. This opens the door for the courts to decide what happens with their estates. When no valid will exists, state intestacy laws dictate how assets are distributed. These laws may divide an estate evenly (or equitably) among heirs. Any assets held in joint tenancy may go to the joint owner. Assets held in a trust may transfer to the trust beneficiaries (with spouses getting a share of those assets in some states). Community property may go to a spouse or partner in community property states.
Simple, right? Unfortunately, the way assets transfer under these laws may not correspond to the wishes of the deceased person. Did the decedent want some of his or her estate to go to a charity or a person close to them? These laws will not allow this. State law may also decide who is the executor of the estate since the decedent never named one.
4. Having a Just Will May Not Be Enough
Your estate plan likely includes a will but it may also include trusts, life insurance, disability insurance, a living will, a pre-or post-nuptial agreement, long-term care insurance, and power of attorney.
While your will states who your beneficiaries are, those beneficiaries may still have to seek a court order to have assets transferred from your name to theirs. In such a case, those assets won’t lawfully belong to them until the court procedure (known as probate) concludes. Estate planning can include items such as properly prepared and funded trusts, which may help your heirs avoid probate.
Incidentally, beneficiary designations for qualified retirement plans and life insurance policies usually override bequests made in wills or trusts. Many people never review the beneficiary designations on their retirement plan accounts and insurance policies, and the estate planning consequences of this mistake can be serious. For example, a woman can leave an IRA to her granddaughter in a will, but if her ex-husband is listed as the primary beneficiary of that IRA, those IRA assets will go to him per the IRA beneficiary form.
5. A “DIY” Will and Estate Plan Might Save A Bit of Money Now, But Could Cost A Lot Later
Maybe you’re considering drawing up your own will and estate plan using an online tool or even just a simple letter. Think twice about that. While you can draft a will on your own, there are plenty of reasons why you may not want to go that route. Remember: this is more complicated than just “leaving a note.” Most people do it themselves to save money, but they may overlook or forget to take care of some important details, the cost of which could easily outweigh any savings.
Wills, trusts, and estate plans should be crafted with the help of attorneys. Fortunately, many financial professionals have relationships with attorneys. Instead of searching the internet or the Yellow Pages for a stranger, ask your financial adviser for a referral. He or she may be able to refer you to a good estate planning attorney and a qualified tax professional. Once you have all these members on your team, they can work together to assist you in drafting your legal documents.
Most people have specific ideas about who should inherit what from their estates. Anyone who cares about the destiny of his or her wealth (and how it may benefit their loved ones and/or the causes close to their heart) should take this basic estate planning step – and there’s no better time than the present.
If you'd like help to create a plan that will put your mind at ease and maximize the good you can do with the estate you have, contact us. We can apply our strategic Plan Well, Invest Well, Live Well™process to help you grow your wealth so that you can Live Well now and know that your loved ones will still Live Well when you’re gone.
Presented by Senior Vice President, Financial Advisor Leisl L. Langevin, CFP®, CDFA®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. 697 Pomfret Street, Pomfret Center, CT 06259, 860.928.2341. http://www.whzwealth.com These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your financial advisor. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice.