What If You Fail to Create an Estate Plan?
I would venture to say that none of us enjoys thinking about the fact that our own death is inevitable, nor do we really want to plan for our own death or potential incapacity. When it comes to planning for death or incapacity, I also think it is fair to say that many of us are procrastinators, falling into what I like to call the Scarlet O’Hara syndrome of not worrying about that today, for tomorrow is another day. Unfortunately, many people fail to do any estate planning during their lifetimes, and they may face incapacity at some point in their lives. They may also pass away without a Will or other estate plan in place. What happens when a person fails to do any estate planning? Let’s take a quick look at that.
If any period of incapacity occurs prior to your death, then without your having put a Durable General Power of Attorney in place as part of your estate plan, your trusted relatives may have difficulty accessing your accounts and other assets to do even simple things such as paying your bills as they come due. There also may be end of life health care decisions that need to be made on your behalf, but without your having executed a Health Care Power of Attorney or other advance health care directive (such as a Health Care Representative Appointment and Living Will Declaration), your family may have difficulty carrying out your wishes concerning your care. They may even have to petition the court to have a guardian appointed for you so the guardian may manage your property and financial affairs and make health care decisions on your behalf.
If you pass away without a Will, Trust, or other estate planning documents in place, the state where you reside at the time of your death will provide a Will for you under its laws of intestate succession. Most people are unaware of the contents of those laws and may not like what they say. Without doing your own planning, the state laws will dictate who is to receive your assets at your death, and in what shares or proportions. You will also leave to chance who will serve as Executor of your estate and be responsible for the final settlement of your affairs. If you have minor children, you are leaving to chance who will be responsible for the care and custody of your children and their respective shares of your estate until they turn 18. Without a Will or Trust in place, you also give up the opportunity to provide for the continued management of assets on behalf of your beneficiaries who may be minors or who you believe may need continued assistance for a period of time because of possible immaturity, a questionable marriage, creditor issues, or other circumstances that lead you to believe that it would not be best for the beneficiary to receive his or her share immediately upon your death. You also may be giving up the opportunity to include provisions in your estate plan that will reduce the time and expense involved in settling your affairs. These are just some of the consequences of failing to put an estate plan in place.
Most of us don’t want to think about the fact that we may at some point become incompetent or that our deaths will occur, and that leads us to fail to address our estate planning. We need to realize, though, that if we do become incompetent at some point in our lives, someone will need to handle our affairs for us. In addition, when death occurs, our assets will be transferred to others whether or not we put a plan in place for that. It is important to take advantage of your opportunity to plan now when you are able to make those decisions yourself, and if you already have a plan in place, don’t forget to revisit that plan periodically and make any desired updates to your plan as your circumstances or the law may change. The computer scientist Alan Kay said, “The best way to predict the future is to create it.” That is certainly true when it comes to your estate planning.