Why do I need an Estate Plan?

Why do I need a will or trust?

Here are some reasons to consider having a professional prepare a will or trust for you:

Avoid Family Conflict—The death of a loved one is an extremely stressful and emotional time.  Unfortunately, the process of administering a decedent’s financial affairs can exacerbate underlying tensions, or even create problems where none seemed to exist before.  Even relatively small and simple estates can benefit from the clarity that an estate plan provides.  Leaving clear and considered instructions can alleviate a lot of stress and complications, allowing your loved ones to focus on grieving their loss.  The most common point of contention is who will be in charge of administering the estate (the executor or personal representative).  Nominating a personal representative in your will minimizes the chances of family discord on that point.  It is also a good idea to discuss your estate plan and wishes with your family and all potential heirs and beneficiaries.  You may even want to consider sharing a copy of your estate planning documents with them.  Establishing clear expectations, well in advance, minimizes conflicts and the potential for litigation.

Make sure your wishes are respected—If you do not prepare an estate plan, your assets will pass to your heirs under the laws of intestacy (inheritance laws).  This is not necessarily a catastrophe: under the probate code, your estate will pass in equal shares to your children.  In many situations, this may be the preferred outcome (though there are many other reasons to prepare an estate plan).  There are an increasing number of situations, however, that complicate the issue.  Obviously, if you want to disinherit a potential heir, you need to prepare a will or trust with that direction.  But the increasing prevalence of blended families and second marriages also complicates the situation.  The rights of a spouse under Utah’s probate laws are substantial.  In a first marriage where all the children are common to the marriage, this is usually not a problem.  But in a second marriage, especially a re-marriage following a death, where both spouses have grown children, may people do not understand how their estate will be distributed.  This can lead to outcomes that the decedent did not foresee, and almost always leads to hard feelings in the family.  Often, the entire estate can pass to the new spouse, and children are effectively disinherited.  Good planning before and after a second marriage can resolve most of these problems.

Avoid mistakes or misunderstandings—There are many misconceptions about estate planning.  Assumptions about the law or DIY solutions often lead to litigation or probate outcomes that do not reflect the wishes of the decedent.  Attempting to save a few hundred dollars on estate planning costs can spawn litigation that runs in the tens of thousands of dollars, delays probate of the estate for years, and permanently damages relationships between family members.  Common mistakes include failing to update beneficiaries on insurance policies and retirement accounts, failing to properly witness wills, and attempting to use joint tenancy deeds to circumvent probate (NEVER use a deed as an estate planning tool without consulting an attorney).

Minimize Costs and Delays—Even a simple, uncontested probate can cost a few thousand dollars, and delay administration of the estate for several months.  If minimizing future costs and streamlining administration are important to you, a well crafted estate plan (usually utilizing a trust) can avoid probate and allow your heirs and beneficiaries to quickly and efficiently administer your estate.

Care for Minor Children—The care of minor children is often the most important issue for our estate planning clients.  Even a relatively simple plan will allow you to nominate a guardian and, if necessary, a conservator for your children (a guardian will raise the children; a conservator manages their money until they come of age).  More advanced estate planning tools, like trusts, allow you to safeguard your children’s financial future with an even greater degree of care.

Answer questions about health care—No estate planning portfolio is complete without an advanced medical directive (living will).  This document allows you to choose someone to make medical decisions on your behalf, if you are unable to do so.  It also gives you the option of giving general or specific instructions about end of life care.  Although this can be a difficult topic to think about, your family will appreciate the clarity you provide for them, if they end up facing difficult decisions regarding your medical care.

Provide important information—Although not legally required, putting together an estate plan is a convenient time and place to collect and store important information, like bank account numbers, passwords, and a list of your assets.  This ensures that, upon your death, your spouse or children will know where to go, and how to take care of your estate.  A common question we receive is “how can I tell if mom had a life insurance policy” or “how do I know where her bank accounts were.”  The only answer we can give is “start calling banks and asking if she was a customer.”  If a bank account gets lost, eventually it will escheat to the state, and your heirs will never receive that portion of their inheritance.  It’s a good idea to put all that information in one place, and including it with your estate planning documents is easy and convenient