With less than half of Americans having an estate plan in place, we are in the same boat as celebrities, like Aretha Franklin or Prince. While our estates may not match their assets, the messes left behind are just as painful to family members.
A recent survey from caring.com found that only 42% of adults have estate planning documents, including a will. That means that almost 60% of Americans are going to leave our families a mess after we die. Here’s what’s even scarier: a recent article from the Chicago Tribune, “Don't leave a mess for your heirs,” reports that only a third of Americans with children under age 18 have an end-of-life plan. They have not named guardians for their own children, in the event of their own deaths.
Many of those who haven’t done any estate planning, say they just haven't gotten around to it. That’s understandable, but it’s important that you conquer your anxieties associated with this emotional subject and take control.
For Aretha Franklin's estate, Michigan (her state of residence) will decide who will get what. The local probate court will oversee everything from property, retirement accounts and the residuals that flow from her music catalog. It’s possible that her assets will be split among her four children. However, as many parents know, some kids are more prepared to manage financial distributions than others—a big reason why estate planning is so important.
If you have property you want to go to specific individuals, you should create a document with instructions as to who gets what.
Some people think that because they don't have a high net worth, they don’t need to worry about such things. However, estate planning isn’t just about money—anyone with young children should have a will, because a will names the guardians of minor children. You want to be certain that you, and not the courts, designate your children’s guardians.
When you’re ready to start or revisit the planning process, talk to a qualified estate attorney (yes, pay for a lawyer and don’t do it yourself), here are the basic documents to consider:
- Will: A document that makes certain your assets are passed to designated beneficiaries in accordance with your instructions. The will designates an executor who will oversee the distribution of your assets. If you have minor children, you must name a guardian for them.
- Letter of Instruction: This may include the appointment of someone who will ensure the proper disposition of your remains. That can be important, if you’re choosing a method that’s contrary to your family's traditions.
- Power of Attorney: This gives a person you select the authority to act as your agent, in certain circumstances.
- Health Care Proxy: This gives a person you select, the power to make health care decisions on your behalf, if you lose the ability to do so.
- Trusts: Revocable (changeable) or irrevocable (not-changeable) trusts may be useful, depending on family and tax situations. You need an experienced trust attorney to help you decide, if this is a sound strategy and to properly prepare the documents.
Even if your funeral plan does not include a gold-plated coffin (like Aretha) or a multi-million estate (like Prince), sit down with an estate planning attorney and prepare these documents to protect your family sooner, not later.
Reference: Chicago Tribune (August 30, 2018) “Don't leave a mess for your heirs”