Risks of Failing to Do Any Estate Planning
Most people are great at procrastinating. We think, “I will take care of that tomorrow.” Or next week. Or next month. Or next year. At some point, the opportunity for estate planning is lost, and sometimes that point comes much sooner than expected. Also, waiting until late in life to do any estate planning can result in missed opportunities that are only available by starting to plan earlier in life.
Some people think that not having a Will means that the government will get everything when they die. This isn’t really true for the vast majority of people, but dying without a Will is still not a good idea. Nonetheless, most people in America do not have a Will. They have chosen the “no plan” option, and if they die their estate will be subject to the laws of the state they live in, and to the dictates of their probate court. If you have been content with the “no plan” option in the past, consider the following risks and opportunities before continuing without a plan.
Some (but not all) of the risks of failing to plan:
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Assets may not be passed on as you would have desired. For example, in Pennsylvania a surviving spouse will often get only a portion of the assets solely owned by a spouse that dies. The rest might go to parents of the spouse that died or to children.
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If there is no Will to appoint a guardian for minor children of parents that die unexpectedly, the court will have to appoint a guardian, and this person may not be who the parents or family would have chosen.
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Lack of a clear plan may result in children or other heirs fighting over the estate or a family business. Too many family relationships have been permanently harmed by disagreements when settling estates.
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The costs of settling an estate when a person dies without a will can be much higher than for a person who died with a well-drafted plan. The process can also take much longer.
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If a person becomes incapacitated, and does not have a plan to manage their affairs, it can be very difficult and stressful for the family to provide necessary assistance and financial management.
Some (but not all) of the opportunities created by good planning:
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You can create a transition plan that reduces the administrative burden faced by a surviving spouse and children. What a gift that will be to them!
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You can transfer or leave assets to charities that can continue to promote your values after you are gone.
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You can often reduce income and inheritance taxes through lifetime gifts to charities and heirs, as well as through charitable bequests at your death.
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You can communicate, through your estate plan, a final expression of your values and your love to those you leave behind.
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You can plan for the successful transition of a family farm or business.