The failure to have an estate plan leaves an ongoing calamity for spouses, children, and anyone else relying upon the deceased. It is unbelievable that there are:
- Parents or spouses without life insurance
- Elderly without a valid Power of Attorney
- Spouses without an updated Living Trust, let alone a Will
No one expects to be infirmed or pass away unexpectedly, but these things happen. Acting responsibly means addressing these matters long before they may occur. When estate planning is not addressed there is a long list of unfavorable and predictable consequences. For example, a relative in his 30s died in a car crash. As tragic as that was, it was compounded by having a wife and three children for whom there was no life insurance, who will face financial struggle. Neither did he have a Will or Trust, so his wife needlessly had to pay probate taxes. In another case, a friend’s elderly father unexpectedly experienced dementia. Since he failed to setup a Power of Attorney (let alone a Will), the court had to approve decisions for his care and estate when he passed away. Since there is a girlfriend with no legal standing and an ex-wife, plus children by both, it is now impossible to distribute assets according to his wishes. Instead, the probate court must follow the state’s allocation formula.
It is a cheap and easy task to get legal forms to do your own estate planning. Some employers even provide this as an employee benefit. If you don’t want to do it yourself or your financial life is complicated, the most you’ll pay for a complete plan, with free ongoing support and updates going forward, is $1,200 to $2,500. Without the free ongoing support, an estate plan can with Living Trusts cost as low as $500-$750. Before you dismiss this as an expensive amount of money, know that it will cost somebody many multiples of that to deal with all of the consequences of not having an estate plan in place. But most issues cannot be fixed in any way after the fact, death or mental incapacity.
The rules for guardianship, inherited retirement accounts, and many others are complicated. Don’t allow complications to stop you from doing what needs to be done. Hire experts and get proper documents signed and in-force before they are needed. Update them when circumstances change. Every year there is someone famous that passes away with no estate plan or an out-of-date one that causes havoc and unnecessary taxes for potential heirs. I review everything related to estate planning once a year to determine adjustments for our circumstances now, or in the future. (If you’ve read my book then you know that this also includes a total insurance review and credit rating review). It is my best advice that you do the same, right away.