The majority of people and clients I talk to admit that they don’t have their will and other estate planning affairs in order, even though everyone seems to know and agree that it is important and should take care of it sooner rather than later. In fact, according to a 2019 Caring.com survey, 76 percent of the 1,003 people surveyed admitted they think having a will and living trust is important but only 40 percent have one. And as you might expect, the majority of the adults who have a will are 65 years old and older.
Here is the thing about estate planning documents like your will – you get it, because it’s a vital part of protecting your wealth and your loved ones, but you hope you won’t have to use it for a very long time. A will is a security measure you put in place to ensure that your wishes are observed when you pass, whenever that may be. Sure, you get it for your own peace of mind, but you really do it for your loved ones.
Think about it. It’s hard enough losing someone you love dearly. It’s exponentially harder to mourn the loss of a loved one and manage the financial and administrative side of loss without a clearly constructed and legally binding roadmap. No one wants to leave their loved ones with a financial mess to sort through. That is not the legacy anyone wants to leave behind.
So, if so many people agree that having a will is important, why haven’t they done it yet? Well, according to the Caring.com survey and my own experience, the simple reason is procrastination. Respondents say they simply “haven’t gotten around to it.”
If you haven’t created your will and living trust yet, let’s get it done. Here are the ten reasons to get your will and other estate planning documents done today!
Here are the reasons to get your will done TODAY
- Decide who gets what. If you were to expire suddenly, do you really want the courts to decide who gets your stuff? Or worse, do you want family to fight about it (which is what usually happens)? Of course not! But if you don’t have an estate plan in place, that’s exactly what can happen and that can lead to some pretty bitter family in-fighting as well. Please do your family a favor and decide now how your assets should be distributed upon your death.
- It’s not just valuable when you die. It is also useful if you’re incapacitated. An estate plan is incredibly useful if you become unable to make decisions temporarily or otherwise. A complete estate plan includes your Revocable Living Trust (RLT) with healthcare directives and durable power of attorney, both of which help to ensure you and your assets are handled according to your wishes and no one else’s. Think about how precious that is for a spouse who is suffering, but can make decisions on your behalf knowing it’s what you wanted. It’s a gift in the midst of unthinkable agony.
- Plan how your beneficiaries receive assets. If you are proactive enough to create an estate plan, chances are you have some ideas of how you want assets handled by your beneficiaries, especially any children or special needs children. With a trust, you can decide exactly how much (percentages) and when assets can flow to your beneficiaries. I generally think no children should receive a large sum of money before age 30, but you can stagger payouts as well across years, say a certain percentage amount at age 25, 30, and 35. You can also include provisions for a child who may need more and grant the executor of the trust authority to make funds available sooner for certain needs or milestones. This aspect of passing on your hard-earned savings is very misunderstood by many. So many people think, “Oh, I’ll just leave my IRA to my sister and she’ll take care of my kids if I die.” But what people don’t realize is that every time your sister spends money on your children, that is technically a taxable gift in the eyes of the IRS! You really don’t want to create that kind of complication. Also, what if something happens to your sister? What if she becomes incapacitated? What if she starts drawing from the IRA and it becomes attachable by creditors? Rather than create a very risky situation for your children, being compassionate enough to have a revocable living trust drafted now will ensure that they can be financially cared for later. These are all decisions you would make for your children if you were alive, and can still make if you die by doing proper estate planning.
- Leave a positive legacy. I have heard absolute horror stories about how many painful hours it can take to settle an estate for someone. According to EstateExec.com, they found that it takes an executor roughly 570 hours of effort on average to settle an estate. 570 hours! The executor is usually someone you are extremely close to, so don’t make their life harder than it already is by their loss.
- You can leave more to charity and your heirs than to Uncle Sam. If you had the option to leave your money to your loved ones and a cause you care about or the government, most people would choose family and charity. Duh. It’s kind of superfluous question. A proper estate plan helps you do just that and, in fact, can create even more wealth for the causes and people you care about because of some pretty remarkable tax benefits when you set-up your trust accordingly. Just ask your financial advisor about a Charitable Remainder Trust.
- Avoid probate. Settling estates through probate can take six months to years and are extremely expensive. All of which reduces the amount of assets that go to your loved ones and increases the emotional and physical burden on your family and executor. Don’t let a court decide who gets guardianship of your children. Don’t let a court decide who gets your house. Don’t let the court decide how your retirement savings will be divided. These are decisions only you should make. So make them.
- Decide what happens to your minor children. If both parents were to die suddenly, what happens to your minor kids? A will allows you to make provisions for them, assign guardianship, and include any special caretaking instructions. It’s impossible to think that you might not be around for them, but it is worse to think they would be caught up in a legal/child custody nightmare that could even involve the public foster care system because you didn’t make arrangements for them if the unthinkable were to occur. If that thought scares you, just get your will done so you know they are provided for as you want *just in case.* [RELATED CONTENT: What Happens to Your Kids If You Die?]
- Save on taxes. Having an estate plan can help you avoid paying hefty estate taxes. For those of you with large estates, note that the estate tax exclusion is currently over $11M for individuals and over $22M for married couples in 2019. So, as an example, if you're married and you die with $25M, then $3M of your estate could be subject to the 40 percent estate tax. That means your kids would owe $1.35M to Uncle Sam within 12 months of your death. As you can see, proper estate planning is incredibly valuable.
- Let your loved ones know your wishes. Your individual accounts allow you to name beneficiaries, but your will is what allows you to make specifications and provide explanation to your beneficiaries. For example, you can prepay for your funeral and specify how you want your funeral arrangements made in the will. If you are in the middle of a divorce, a will, which is far easier to amend than a trust, can ensure your soon-to-be-ex will not be able to make claims on your estate. Or you may want your sister to get your car and your cousin to get a special piece of jewelry. There are things that are valuable to you and to your loved ones beyond cash, and those are the items you can also account for in your estate plan.
- Determine who is in control of your estate. Very importantly, you can select the person who will serve as executor of your estate. This is the person who you know can get stuff done and can manage the emotional and administrative complexities of settling an estate. If you can afford to do so, you may also consider hiring a financial advisor or attorney to be your executor so that no one you love is tasked with those 570 hours we mentioned before!
Pro tip: Your estate plan is not a place where you should look for discount advice or boilerplate solutions. Non-customized plans can be useless at best and deleterious at worst. Please, invest responsibly in this critical piece of your financial planning! Your loved ones will thank you.
So, my question to you now after we have reviewed these ten reasons why you should get your will done today is: Are you finally going to do it? I coordinate many of my clients’ estate planning needs with their attorneys and help navigate complex and large estates and family situations. Your first step in getting your will done could be reaching out to me if that feels easier. Don’t delay anymore. You just never know how much time you have to make these invaluable decisions.