The Important Reasons Your Family Needs An Estate PlanSubmitted by Castlebar Asset Management on October 22nd, 2015
Family’s schedules are typically packed with school, activities for you and your children and squeeze in work for you. I recognize the last thing on your mind is putting together or establishing an estate plan. In fact convincing families to meet with an estate planning attorney can be like doing dentistry on a lion while it’s awake.
Over the years I have heard a litany of reasons and excuses why parents in their 30s and 40s don’t want to do it. Only about 25% of parents under the age of 40 have an estate plan in place, which is not an excuse, but you are not alone in procrastinating. Below are some of the excuses I receive and answers why you do need to have a plan.
We are not wealthy enough.
Your net worth only has a small part to play in estate planning issues. In 2015, the federal estate tax exception is $5.43 million so for the vast majority of us we are not doing estate planning to minimize our tax bills. Having an estate plan created is important to get the right people in charge if the unexpected happens. This could be having the person you want caring for your children if you are unable or making healthcare decisions for you. In terms of your assets having a proper estate plan in place will have your assets distributed as you see fit.
I am too young.
This is usually another way of saying nothing is going to happen to me so I don’t have to worry about it. Age has little to do with your estate planning needs. The exact reason you need to have your estate documents created or updated is because of the unexpected life event where you’ll need someone to make a medical decision to take care of you or your family when you are gone. Also if you set up a trust before you start to accumulate a lot of assets it is easier to stay organized. As you build your net worth you will have your investments titled correctly and beneficiaries in order.
It costs too much.
You don’t want to spend more money on something you don’t get an immediate benefit from, I get it. We have usually just tweaked items in your budget, increased your 401(k) contributions and maybe bumped your life insurance benefit. Spending additional money is the last thing you want to do. Estate planning documents are not something you update on a regular basis, although you should review them periodically. The costs of them can be amortized over a long period of time. These documents can serve their purpose for a decade or two. Also the cost of going through probate can be much more expensive than the initial costs to establish a plan.
I don’t know what I need to do and don't know where to start.
The estate planning process is one where most people go in knowing very little. It can be a confusing and overwhelming if you try to Google your way through it alone. Figuring out what documents you need created and if you should chose a will or trust is something unique to your family’s situation. Meeting with an estate planning attorney or several can help educate you on what is right for you based your needs, budget and goals.
Estate planning seems unnecessary.
I just don’t think I need to spend the time, money and effort on it. I have heard this reason a few times. If Estate planning doesn’t seem important after everything we discuss above think about this. Do you want other people to clean up your mess after you are gone or have family fight over what you may or may not have wanted? I don’t think so! Planning will help prevent conflicts and make sure wishes will be met.
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