Estate Planning 101: Top 6 Reasons to Develop a Will & Get the Estate Planning Process Started

Estate planning can protect your loved ones, as well as your legacy, in the future. As you proceed with the estate planning process, developing a will is going to be a crucial starting point. And here’s why…

Most Important  Reasons to Devise a Will ASAP (If You Don’t Already Have One)

Making a will is so critical because these essential estate planning documents can empower you:

1 – To protect  yourself

Regardless of your financial status and wealth, making a will allows you to specify your wishes for the future in the event that you become catastrophically injured or incapacitated. In fact, through your will, you can set up invaluable protections for yourself, such as a:

• Financial  power of attorney, through which you appoint someone (i.e., an agent or an attorney-in-fact) to oversee your financial affairs in the event you become unable to do so for yourself.

For instance, if you have a business, setting up a financial power of attorney can ensure that your business’ operations (along with any other important financial affairs) are appropriately managed in the future if you can’t manage them for any reason.

• Medical  power of attorney¹, through which you select an agent to carry out your health care wishes and/or make important decisions regarding your health care in the event you cannot make these decisions for yourself in the future.

For example, if you end up in a coma or you are diagnosed with Alzheimer’s, your medical power of attorney can ensure that your wishes regarding your health care and/or end-of-life directives are appropriately carried out.

If, however, you become incapacitated and you don’t have a will or powers of attorney in place, important decisions about your finances and/or health care can lie in the hands of someone whom you don’t necessary trust (as it will be left up to the court to decide who has the authority to make these decisions for you, and the court may select an agent who you would not have preferred).

2 – To protect  your children

Protecting your children may be far more of a concern than protecting yourself. And if it is, taking the time to make a will now can also be critical to this end. In fact, through your will, you can do the following to ensure your children are protected in the future after you pass:

• Appoint guardians for your minor children
• Set up trusts to provide future financial support for any of your children, including those who may have special needs.

Without a will in place, if you end up passing away, custody of your children may end up going to someone whom you would not have chosen, and/or assets that you wanted to hand down to your children may end up going to other people or places – including creditors or the IRS.

3 – To select your  heirs

When you make a will, you have the power to specifically name – or to specifically not include – certain people as beneficiaries to your estate. This can be a very compelling reason to make a will, as:

• You may have specific ideas of who should get what after you pass away.
• You may have children from previous marriages who you want to ensure get certain assets or property.
• You may have had fallings out with some close relatives and want to specifically prevent them from trying to get their hands on your assets after you pass away.

Here, it’s also important to point out that, in addition to choosing your beneficiaries, you can also set up special provisions in your will to try to minimize future disputes over it (which, again, may be a viable concern if you’ve had a falling out with a close relative who you think may try to cause more trouble after you pass away).

For instance, your will can include provisions like “no-contest clauses” (or terroreum clauses). These clauses can specifically state that people who challenge the validity of a will can be completely disinherited from it if their contests are unsuccessful.

4 – To minimize  future estate taxes

Depending on your assets and the nature of your estate, future estate tax obligations² may be incredibly expensive. In some cases, they may even result in a significant portion of an estate’s assets going to the IRS, rather than to your loved ones.

By devising a will now, however, you can put certain estate planning tools in place to minimize these future tax obligations and, in doing so, save more of your assets for your chosen beneficiaries.

5 – To minimize  future probate costs and obligations

Probate³ can be a contentious, costly and complicated process that could end up compounding your loved one’s emotional and financial stresses after you pass away. In fact, while probate can last months, in the most complex cases, it can drag on for years, leaving your assets tied up in court instead of in the hands of your loved ones who may need them.

If, however, you take some time to now to develop a will, you can set up various types of trusts and/or other estate planning tools that can:

• Directly pass certain assets to your loved ones (like, for instance, passing a home onto a surviving spouse)
• Allow your loved ones to get through probate far more easily or, better yet, sidestep probate altogether (depending, of course, on the specifics of your estate).

6 – To enjoy some  peace of mind

The reality is that we never can predict what tomorrow will hold for us. If you end up passing away without any will in place:

• Your loved ones can be left with some significant financial burdens.
• Your minor children can end up being cared for by people whom you would not have selected.
• Your precious assets could be drained away to taxes, creditors and/or court costs, leaving very little – if anything – behind for the people who you love.

The bottom line here is that some upfront planning via a will and a comprehensive estate plan can go a long way towards protecting you and your loved ones, saving money and reducing future stresses. In other words, with wills and estate planning, the old adage – an ounce of prevention is worth a pound of cure – can certain ring true, as you can’t go back in time to set up these protections after an accident or death occurs.

Estate Planning  101: More Important Information to Help You Get Started

Now that you know why having a will and estate plan is so essential, here are some additional things to keep in mind as you proceed:

• It’s  never too early to get started with estate planning – In other words, don’t wait until your retirement years to start thinking about devising a will or an estate plan. This can be a dangerous and costly gamble if a catastrophic or deadly event occurs.
  
  
• A will is  just a starting point – Although wills are commonly the cornerstones of estate plans, they are not necessarily the only estate planning feature that you may need if you are serious about fully protecting yourself and/or your loved ones in the future. Other important estate planning features to consider (depending on your needs and wishes) can include trusts, guardianships, powers of attorney, etc.
  
  
• Making a  plan to regularly update your entire estate plan is essential – Forgetting to review and update an estate plan is a common mistake people make, as it can be easy to fall into the “set it and forget it” trap once an estate plan is in place. At the very least, however, it is important to go over and, if needed, update your estate plan on an annual basis. This is because life changes, families change and the nature of an estate can evolve. By taking some time to regularly review and revise your estate plan, you can ensure that it is up to date and reflective of your current beneficiaries, personal representative(s), estate and wishes. A helpful tip for making this a habit is to schedule your estate plan review around another annual event – like filing your income taxes or changing your clocks for Daylight Savings Time.
  
  
• It’s best  to work with a lawyer when developing a will and an estate plan – And that is because an experienced estate planning lawyer can help you determine what estate planning features aside from a will you may need, based on your situation and goals. Additionally, an attorney can help ensure that all of the estate planning features you put in place are in compliance with all applicable state and/or federal laws so that these features truly offer the protections you need and expect in the future.

Full Disclosure

The information in this article is not, nor is it intended to be, legal advice.

If you live in the Los Angeles area and you are ready for some specific professional advice regarding estate planning and/or probate, you are encouraged to contact the Law Offices of Darrell C. Harriman.

1: American Bar Association (ABA) Guide for Medical Powers of Attorney - https://www.americanbar.org/content/dam/aba/uncategorized/2011/2011_aging_hcdec_univhcpaform.authcheckdam.pdf

2: IRS Guide to Estate Taxes - https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estate-and-Gift-Taxes

3: ABA Guide to Probate - http://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/the_probate_process.html