"If you do not have a Will or plan for your estate, then the government has one for you."

- Shez Christopher

Despite the undeniable benefits, only 33% of US adults have created an estate plan. Why so low? Well, it’s simple - most people don’t realize how important it is, while others might find the whole “end-of-life” topic a bit too heavy to talk about. Plus, there’s a common myth that Estate Planning is just for the wealthy, which couldn’t be further from the truth. Having an estate plan is crucial if you want to be sure about what happens to your belongings and assets if the unexpected happens. Here are some essential reasons to consider Estate Planning that might just inspire you to get started. 

1. Reclaim Control Over Your Assets

Without an estate plan, your estate will be subject to “intestacy” laws. What does that even mean?! If a loved one passes away without any estate plan documents (a will or a trust), he or she is deemed by the state as having died “intestate.” When this happens, the distribution of the deceased’s assets is handled according to state-specific intestacy laws. Normally, these laws prioritize close family members, such as spouses, children, and parents, in determining who inherits your estate. Essentially, you lose control over how and to whom your assets and belongings are distributed if you want them to go to specific people or be divided in a particular way. Plus, the predetermined or default distribution can cause conflicts among family members, adding to their grief.  

2. Secure Your Children’s Future

If you have minor children, having an estate plan is important as it allows you to dictate who will care for them if you pass away or become incapacitated. A will or a trust lets you name a guardian for your minor child(ren), ensuring they are cared for according to your wishes. Knowing your child(ren) will be okay if something happens to you provides invaluable peace of mind. While it’s not something we often think about, having an estate plan helps prepare for the unexpected.

3. Avoid the Hassle and Expense of Probate

Probate is the legal process of settling a deceased person’s estate. This process involves validating the estate, paying off debts and taxes, and distributing the remaining assets to the rightful heirs or beneficiaries. As mentioned in the first essential fact, without proper estate plan documents, the estate will be distributed according to California intestacy laws, not according to the deceased person’s wishes.

Probate is often time consuming and expensive. The process can be complex, so hiring an experienced probate attorney is usually necessary. These attorneys are entitled to statutory fees, which are a percentage of your estate’s value. For example, in California, the statutory fee might be 4% of the first $100,000, 3% of the next $100,000, and 2% of the next $800,000 of the estate’s value.

Additionally, probate proceedings take time and can delay inheritance to rightful heirs or beneficiaries. For instance, in California, a probate matter can take several months to over a year to complete. The costs can range from 4% to 7% of the estate’s value, depending on its complexity. Creating a trust or a will can significantly reduce the time and costs associated with court or attorney fees, as it typically includes clear instructions on how the deceased person’s assets and belongings should be distributed. Planning ahead will be worth it as it can save your loved ones both time and money.

4. Protect Your Assets and Legacy

Having an estate plan is essential because it can protect your assets. If you have loved ones who are known to mishandle finances, creating a trust allows you to set provisions that can stagger distributions, set age limits, and require certain milestones before assets are distributed. These customizable provisions are also helpful if you don’t want a minor child to receive a large inheritance all at once. For example, you might want little Bill to receive part of his inheritance at age 18 and the rest when he graduates college or turns 25. Trusts offer flexibility and protect beneficiaries from their own habits, giving you peace of mind regarding the distribution of your assets and your legacy. 

5. Reduce Family Drama

Weddings and funerals: the grand stages where family drama tends to shine the brightest. Why does it always seem to go this way? Well, mix emotions with finances, and you've got the perfect recipe for chaos. When a loved one passes away, emotions understandably run high. Family dynamics can be tricky, so deciding how a loved one’s assets and belongings will be distributed can add stress to the grieving process. Even in families with decent relationships, heightened emotions can make people unreasonable. Having an estate plan that details how the deceased person wants their assets and belongings distributed eases the burden and reduces the risk of family feuds. 

Do yourself and your family a favor - Plan ahead and prepare the proper estate plan documents to avoid potential conflict and added grief.

In summary, an estate plan ensures your wishes are honored, minimizes family conflict, and avoids the time and expense of probate. Taking the time to create one now can provide peace of mind and protect your loved ones from unnecessary stress in the future.