Why do I need to have an estate plan?

For those of you who missed it, October 17 -23 was National Estate Planning Awareness Week. Since 2008, this annual event has been aimed at educating the public about estate planning and the reasons why it is so crucial. One would think that people recognize the importance of estate planning today, given the fact that so much financial information is currently available through the media and on the internet. The reality is that more than half of Americans do not have an up to date estate plan. Over our many years of practice as estate planning attorneys, we have seen far too often what happens to families when a loved one passes away without a will in place. In the spirit of the recent awareness drive, let's take a look at the key reasons to have an estate plan.

1. Financial Control

By having a well designed estate plan, starting at least with a will, you will rest assured knowing your assets will be protected and your wishes carried out. A will enables you to plan for the distribution of your property and name beneficiaries who will receive an inheritance.

2. Protect Your Privacy

Because a will is a public document that must be probated in court, we often recommend putting in place a revocable living trust. This estate planning tool takes ownership of your property but allows you to continue managing your financial affairs during your lifetime. A trust also allows you to plan for incapacity and avoid the delay and cost of probate when you pass away; a trust is a private document that does not get filed in probate court.

3. Planning for Incapacity

Although people are living longer today, many will experience some type of disability as they age. A well designed estate plan will include a power of attorney for healthcare, or healthcare proxy. This document allows you to name a trusted individual to make decisions about the care you prefer to receive if you are unable to speak for yourself. In addition, a general durable power of attorney allows you to designate someone to manage your financial affairs if you become incapacitated.

4. Protect a Closely Held or Family Business

If you own a small business, you know that it takes years of dedication and hard work to be successful, but most closely held and family businesses do not survive into the next generation. With this in mind, having an estate plan is essential for protecting other partners, owners and family members from the adverse impact of your sudden death or incapacity. In particular, it is necessary to designate individuals who will take the reins of leadership, plan for potential tax liabilities, and ensure business continuity.

The Takeaway

These are only a few of the reasons to have an estate plan, and although estate planning awareness week has come and gone, it's not too late to start planning now. By engaging the services of an experienced estate planning attorney, you can protect your assets, provide for your loved ones and relieve surviving family members of the burden of making these difficult decisions.