We’ve all read or heard the stories. Someone passes away without a will, and potential heirs sharpen their knives in a free-for-all that can take years to play out in court. The emotional toll is immeasurable, with relationships incurring irreparable harm that can last generations. Still, you may still wonder what the big deal is. Why is an estate plan so important? Or, as highlighted recently in the Wall Street Journal, “The Brady Bunch Breaks Down: Estate Fights Tear Stepfamilies Apart—In Standard Estate Plans, a Surviving Spouse Often Has No Legal Obligation to Stepchildren,” failure to plan adequately can lead to devastating consequences for blended families. “The default rules are out of touch with today’s family structures,” according to Danaya Wright, a University of Florida law professor. In T.V. land, Carol would not forsake Mike’s three boys if her beloved husband passed first. Even their housekeeper, Alice, who became part of the family, would have been cared for. But T.V. and real life don’t always line up. In today’s world, Greg, Peter, and Bobby could be left high and dry without a concrete, written plan. The implications are real and immediate. Without a will or trust, the state chooses how your estate is divided and who will care for your minor children. According to a new survey from Senior Living Referral Service Caring.com, only one-third of Americans have a will or plan to distribute their assets after they die.But, you may ask, the wealthy make up a small percentage of those with significant assets, right? The wealthy hire the best and brightest to manage their affairs, right? Well, not always. According to a recent Charles Schwab survey, one in five Americans with investible assets of $1 million or more doesn’t have a will. Legendary talk show host Larry King purportedly wrote a short, handwritten note with typos to update his will, leaving all his funds to be divided evenly among his children. That’s a recipe for a long and drawn-out court battle. Whether young or old, the famous have passed on without written plans, including Aretha Franklin, Prince, Michael Jackson, Bob Marley, Jimi Hendrix, Sonny Bono, Kurt Cobain, and Amy Winehouse. Even Abraham Lincoln, a lawyer, didn’t have a will. Valued at $80 million, the fight over Hendrix’s estate lasted over 30 years. Without a clear plan, your heirs could quickly turn to lawyers and the court. Dying intestate—without a will—will have consequences no matter where you live. How your affairs are settled depends on the state in which you reside. But it is challenging if there are unmarried partners, stepchildren, and even a parent’s own child who may lose an inheritance.
Stop Procrastinating
Estate planning requires us to do something today that hasn’t happened yet. Without a plan, your family must guess your intentions against the backdrop of an already difficult situation. Even if potential heirs are on good terms, money has a way of creating divisions. A good time to schedule a review is at the start of each season—spring is an ideal opportunity to reassess whether your documents still reflect your wishes.
Key Takeaways
- Common estate planning documents include powers of attorney, living wills, and trusts.
- No matter how small their estate, everyone can benefit from a will.
- Online estate planning services offer basic packages.
- Estate planning attorneys are invaluable when constructing estate plans in more complex familial situations.
- After significant life events, estate plans must be updated.
What is a Will?
A will is a legal document that states how your assets will be distributed after your death. Your estate will go through probate—the legal process for reviewing a deceased person’s assets and determining who inherits what—regardless of whether you have a will. A will simply ensures your executor honors your wishes.
A will lists your assets, bank and brokerage accounts, property, and more. Without a detailed document, heirs may struggle to locate assets spread across states or countries. Remember: beneficiary designations on accounts like IRAs override what’s in your will.
What is a Living Will?
A living will is a document stating your preferences for medical care if you cannot make decisions yourself.
What is a Trust?
A trust is a legal contract in which a trustee holds property for your benefit (as the grantor). Living trusts hold assets before and after your death. Testamentary trusts are created by your will and only take effect after your death. If you have a child or family member with special needs, a special needs trust offers significant advantages—see our detailed guide on special needs trusts explained.
Powers of Attorney
A durable power of attorney empowers an agent to act on your behalf if you become incapacitated. A financial power of attorney covers financial affairs; a medical power of attorney covers life-prolonging care decisions.
Prepare Your Heirs
You don’t need to divulge every detail, but informing beneficiaries opens communication and reduces the odds of a contested will. It also promotes family unity during difficult times. Surprises often breed resentment and unwanted consequences.
Estate planning is personal. Our role is to initiate a dialogue, help you develop a plan, or revise an existing one if needed. If you are evaluating financial advisors to help guide the process, consider reading our guide on how to choose a financial planner.
