Planning your final affairs is never an enjoyable activity. Most people really don’t want to think about what they need to deal with when they pass away.
Is this you? Think about is not only what will happen to you, but what will happen to your spouse, children, and any relatives or friends who are involved in your life. Will you saddle them with a huge, expensive, and long-term burden, possibly including a tax bill? Or will they be able to finish your administrative affairs quickly and easily, receiving what you wanted them to have?
Creating an end-of-life estate plan isn’t just for high-wealth individuals. Estate planning for both long-term care and the day you pass away allows you to take control of everything ahead of time before anything happens. Without a solid plan in place, the state will take over your affairs and decide who, if anyone, is entitled to what you intended for them to have.
Here are three reasons why poor estate plans can negatively impact your heirs.
Pit Family Members Against Each Other
Maybe you told one of your children or other relatives that you were going to leave them money, property, or an object in your home that they really admire. Or you promised a grandchild they would receive your car when you pass away. If you don’t add this into your will or estate plan, that individual will be unhappily trying to get what they were told they would receive.
In the case of your property, cash, bank or brokerage accounts, or other assets, not designating or designating incorrectly can lead to bickering and frequently end up in an expensive court battle. Eventually, it can lead to family arguments and eventual splits over parts of your estate.
And if you have had more than one spouse, especially with children, get started on that estate plan now to ensure that any potential strife is stopped before it begins. You’ll protect your beneficiaries and their inheritances by putting it in writing.
Dealing With Open Accounts
If you passed away tomorrow, think about who will sort through your home, and through your things. How long would it take just to go through the physical stuff? A week? A month? A year? What would they need to keep, and what to dispose of?
Part of updating your estate should include a “spring cleaning” of not only your home but your accounts. Begin eliminating clutter, disposing of possessions you no longer use or need, including clothes, furniture, decorations, etc. Equally important is to consolidate accounts and streamline them so that there is less for your family to deal with later, and no unknown or forgotten accounts.
Your spouse, children, or other relatives, executor, or other representatives will have to handle your bills and other accounts after you’re gone. Things like credit cards, bank accounts, utility bills (lights, power, Internet, etc.) will need to be dealt with accordingly. Someone will need to be able to close the account, or at least change the name on the account going forward.
You’ll need to designate an individual, whether a relative, executor, trustee, attorney, or other representatives, to handle accounts. Otherwise, no one will know where to find your accounts. Unpaid bills that no one knew about can go to collections, leaving your descendants fielding calls from debt collectors—some of whom will imply or suggest that it’s their responsibility to pay the debts when it actually isn’t.
Thinking You’re One And Done
Don’t fall into the trap of thinking that you just need a will and that’s it. Unfortunately, the estate plan you created and signed 15 years ago is not likely a good one now. Maybe you’ve had children since then, divorced and remarried (with more children or even grandchildren) or changed careers since then. You may have bought or sold the property, such as a boat or vacation home.
There’s more to it than just a will, including:
- Powers of Attorney (POA), for different aspects of your estate and care, such as:
- Durable and/or non-durable POA, depending on the situation
- Healthcare POA
- Financial POA
- Transactional POA for an individual transaction, such as the sale of a house
- Medical Directive, aka “the living will”
- Trusts to hold the money until the appointed time, keeping it out of the probate process
Without powers of attorney, your fate could like with the courts, who will appoint a guardian to represent your interests. This means that instead of your spouse or partner, children, or other loved ones, the court will make decisions on your behalf.
Getting all of these documents in order ahead of time before there is a need, or before any possible mental decline begins, ensures that you are in control of your life and your estate. Otherwise, your family and heirs will be saddled with an unnecessary burden that could have been avoided.
James C. Provenza, Chicago Estate Planning Attorney
Good estate planning and regular reviews are key to making sure your wishes are carried out, and your family and friends aren’t burdened with sorting through your affairs. You’ll make it easy on them at a time when they need all the help and emotional support they can get.
Work with an estate planning attorney who understands estate planning law and can help you design an estate plan that’s right for you and your family. James C. Provenza is an Illinois estate planning attorney with more than 25 years of estate planning experience. Call our firm today at (847) 729-3939, or use our online contact form.