Did you know you need an estate plan? You really do. Creating a will or trust can insure that your assets are transferred the way that you want them to be without the unintended consequences that might accompany the no-plan situation.
Without an estate plan to guide and instruct your family when you can’t, either because of incapacity or death, it’s very likely they will face some challenging issues. Here are just a few reasons you why it’s so important to have up-to-date estate plan.
- Spendthrift heirs. It’s pretty rare that a young heir can handle a large sum of money all at once. Some heirs, regardless of age, are just bad at handling money, and others may have addiction issues—like gambling or abusing illegal substances. Either way, handing them a windfall can enable bad habits. “Spendthrift” trusts can be a godsend to beneficiaries who needs the funds your inheritance will provide but need the guidance on how much to budget for monthly expenses so that your inheritance will be there for them when they need it. This type of trust typically does not allow the beneficiary to be their own Trustee, instead, they will benefit from the guidance of someone that understands their lack of money management and provides a plan of action for them that includes what they can spend their money on, when and with what frequency that money can be spent, and how that distribution will take place, for example, automatic payments of monthly necessities with an additional distribution of small amounts of ‘mad money’.
- Property (and probate) in more than one state. If you have property in several states, dying without a trust can result in some of your estate having to go through probate in multiple states. This can be costly and time-consuming—particularly if each beneficiary hires an attorney in each state. Let’s do a quick math problem: there are three beneficiaries with estate property in four states. How many attorneys might be hired? Answer: 12.
- Fraudulent wills. If there’s no estate plan in place, it gives the opportunity for a treasure seeker to make a fake, particularly if you have a big estate. Remember Howard Hughes? He died with no immediate family and no estate plan. Within a short period of time there were several purported wills claiming to be the legitimate one. His estate spent millions defending against the fake documents. It’s harder to do this these days with more sophisticated analysis tools, but why subject your heirs to potential headaches and unnecessary legal bills?
- Beneficiaries don’t like the court-appointed Administrator. When there’s no estate plan, there’s no designated fiduciary. In Virginia, after a period of time has elapsed, any ‘interested party’ may apply and qualify to serve as the Administrator of the Estate. That interested party could be a creditor of the estate whose primary focus is collecting the money due them; is that who you had in mind?
- Who are the Beneficiaries? Without an estate plan, the Commonwealth of Virginia (or the state in which you die) will determine who will benefit from your estate.
The biggest impediment to creating an estate plan is procrastination. It’s easy to set up a complimentary consultation, either by going to our website and requesting a consultation or by calling our office @ 757.259.0707. Have you made that appointment yet; what are you waiting for?
Reference: Nerd Wallet (August 3, 2016) “5 Hidden Dangers of Not Having a Will”