Consumer Reports recently published an article entitled "6 Costly Estate Planning Minefields and How to Avoid Them".
The article pointed out that in 1998, 61% of Americans 55 and older had a will or trust. By 2012, that percentage had dropped to only 54%. In addition, even those who did some planning, may have missed important "minefields" that could come back to haunt them, or their families.
In the coming months, we will take a closer look at each of these minefields, and how you can protect yourself and those you love.
Minefield #1: Not creating a Will because you are too young or don't have enough assets.
The article correctly points out that a good estate plan doesn't just cover your death. A good estate plan also provides what happens if you become incapacitated during your lifetime, and needs to include the following:
- A power of attorney so the person OF YOUR CHOICE can make financial decisions for you until you recover.
- A medical power of attorney document in which you name the person OF YOUR CHOICE to make medical decisions for you.
Without these documents, your family will be forced into probate court to have the JUDGE DECIDE who will handle your affairs for you. This method is much more expensive and time consuming than preparing your documents in advance.
What about your children?
A good estate plan doesn't just deal with assets. If you fail to document a plan, you give up all control over who will become the guardian of your minor children in the event of your death. By failing to put a plan in writing, you are also agreeing that your children receive their entire inheritance at age 18 - without any management or supervision by a more mature adult. Finally, failing to create a plan forces your family to go to probate court to distribute your assets. Again, that is much more expensive than finalizing a comprehensive estate plan in advance.