When learning that a newspaper had printed his obituary, Mark Twain quipped, “Reports of my death are greatly exaggerated.” The same could be said about the need to have a current estate plan. After the purported repeal of the federal estate tax in 2001, many people concluded that most families no longer need to have estate plans. That would be true if the only reason to have an estate plan was to save taxes. It isn’t.
- Who gets what? Although tax savings has traditionally driven most estate planning, you have other important non-tax reasons for maintaining an estate plan. For instance, without an estate plan, who decides who gets grandma’s wedding ring? Without a will, state law will dictate who gets what, and it is safe to say that legislators’ decisions on who will get your family heirlooms likely don’t agree with yours.
- What about the kids? For parents of young children, probably the most important reason to create an estate plan is to leave clear instructions regarding their care. A properly executed will can name a guardian for minor children and direct how he or she should use inherited assets for their care.
- Yours, mine, and whose? In blended families where one or both spouses have children from a previous marriage, a well-crafted estate plan can help avoid strained relations after a death. For example, each spouse can initially ensure their individual assets are available to provide for their surviving spouse. But after the second spouse has passed away, identified assets would go to their own children rather than their spouse’s.
- What about you? In addition to your will (and maybe a trust), your estate plan should include personal documents such as a durable power of attorney, a health care surrogate designation, and a living will. A power of attorney gives someone you trust the ability to manage your affairs if you become incapacitated or disabled. A health care surrogate designation is similar to the power of attorney, but gives someone the ability to make medical decisions on your behalf. The living will tells your relatives and health care professionals your preferences as to whether you want to be kept alive by artificial means.
These are only some of the reasons why you should establish an estate plan – and keep it current. Your own circumstances may present other important reasons, so you should consult your attorney regarding your personal estate plan.