Dear Kiwi and Mango,
I heard somewhere that not having estate planning in place can make family feuds more likely. Can you explain why? I need to convince my family to come in and get our estate planning done. Thanks so much for your help!
Fy Ting
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Dear Fy,
According to a survey released Tuesday, 90% of Americans say having estate planning documents in place is important, yet less than half actually have them done. The survey goes on to reveal that without proper estate planning, nearly 60% of respondents have experienced family disputes, as you mentioned.
The nationwide survey tapped into the fears and uncertainties surrounding end-of-life preparations. Nearly half (46%) of respondents confessed to not knowing where to begin, while nearly 3 in 4 (72%) shied away from estate planning, fearing that it was expensive.
The survey revealed the following additional insights:
- 58% experienced conflict, or know someone who has experienced conflict, due to the absence of an estate plan;
- 56% of those with a spouse/partner don’t have estate planning documents in place;
- 37% of adult children who know their parents have estate planning documents in place don’t know where they are;
- 22% of those with estate planning documents have never updated them; and
- 36% say there are surprises for their beneficiaries in their estate planning documents.
According to Investment.com, “lack of planning can lead to a family falling apart when the matriarch or patriarch passes away. Many people think their children will get along and can ‘handle it’ when it comes to estate settlement. Nevertheless, not having a clear estate plan in place leaves the surviving family open to disagreements and, potentially, courts determining the next step. In the end, it can be more expensive and draining for family members than completing an estate plan in advance.”
Laurie Humphrey, a financial expert says, “(e)veryone handles grief differently, more so when money is involved. Having a specific plan in place that is legally binding and determined in advance can help to facilitate the smooth transition of assets, helping to mitigate some of the emotion that occurs during that time.”
Other Reasons to Get Your Estate Planning Documents in Order
Besides sparing your family pain and strife, these are other reasons to get your estate planning in order:
- To avoid probate: If you die without appropriate estate planning documents in place (or if you only have a Will in place), your estate will go through probate. The probate process is lengthy, public, expensive, and often emotionally painful. You want an easy transition of your assets and probate is anything but easy. A living trust is the primary way to avoid the nightmare of probate.
- To minimize taxes: A careful estate plan can create less of a tax burden for your relatives. For example, your beneficiaries will need to pay income tax on money they inherit in a traditional IRA. However, money you leave them in a Roth IRA can be withdrawn tax-free.
- To choose a guardian for minor children: Families with minor children need a last will and testament to appoint a guardian to continue to raise their children until age 18 if both parents die, and a trust to hold their assets to be managed by a a trusted adult who will use the money for the benefit of the children until the children reach a pre-designated age of maturity, typically age 25, which is when science tells us the brain is fully developed. Many young couples don’t think about dying prematurely, but in the event of both of their untimely deaths, they need to appoint someone to be the guardian(s) of their children, and a last will and testament is the only document that does this. In fact, this is one of the main reasons for having a last will and testament. Of course you would want a say in who would take care of your kids if something should happen to you! Setting up an estate plan enables you to designate the right person(s) and can prevent relatives from squabbling over who gets guardianship.
- To choose how to distribute your assets: An estate plan allows you to allocate your assets according to your wishes. If you don’t have an estate plan, your money and property may not be left to the person/people you had in mind.
As part of estate planning, an incapacity plan should also be set up to ensure that your wishes are met should you become incapacitated prior to your death. If you don’t have estate planning or incapacity planning in place, please call the Farr Law Firm as soon as possible to get started.
Hope this helps!
Kiwi and Mango
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