We have already discussed the first mistake one can make vis-à-vis their estate plan. Namely, not to make one; simply failing to plan. There is a common misperception that estate planning is only for the wealthy; only for the 1%. This is entirely false. Everyone needs a plan. If you are reading this and you yourself haven’t yet begun to plan you may be under the impression that you don’t have a plan. You might be thinking that you don’t have a will. Actually, you would be quite wrong on both accounts. Indeed, you do have a plan and you do have a will, of sorts. It was created and written for you by your local state government. Did you know that? It is called the law of Intestacy.
When you die without leaving a properly drafted and executed will you have died “intestate” and are thus subject to the law of Intestacy. It is this law that will govern what happens to your assets and even your children. If you haven’t yet chosen your own plan and set forth your own wishes as to the disposition of your assets and the raising of your children and you died today, you will have died intestate and people you have never met and will never know will determine who gets your possessions and who will raise your children. The intestacy laws differ from state to state but what is common amongst them is that none of them were written by you. If you are anything like me you are finding that thought unsettling, to say the least, and perhaps even horrifying. When is the last time you wanted the government to decide what happens to you or your money?
In the case of intestacy, lineage usually takes precedence over what the decedent would have chosen. This can and often does lead to undesired consequences. In some states the law of intestacy states that your spouse will inherit you completely and without restriction. If you are not in the happiest of marriages or you are divorcing, how do you feel about your spouse inheriting everything you own? Even if you are happily married, how do you feel about your spouse inheriting everything you own and getting re-married. What if s/he marries a spend-thrift and blows through everything you worked so hard to earn? Will your money ever make it to your children? Will you have left a legacy at all?
In some states the law of intestacy states that half your possessions go to your spouse and the other half to your children. What if your children are minors? Who will manage that money for them? How do you feel about the courts making that decision for you? What happens when your children turn the age of majority at age eighteen? Do you think that is an appropriate age to inherit a lot of money? How many eighteen year olds do you know who have the maturity to handle, save, invest and spend money wisely?
But wait. How silly of us to be thinking only of material possessions right now. If you were to die without having executed a will, who would be appointed to raise your children? How do you feel about the court making that decision for you? What if the most logical choice for the court to make is a family member you don’t trust? Or, perhaps you do trust them but you don’t approve of their spouse who is verbally abusive or difficult? Maybe they are wonderful people but you simply don’t see eye to eye about how to raise a child and about what values to instill within them? For heaven’s sake, these are your children we are talking about! Can we leave this all to chance? Can we take these kind of risks?
I am sorry if these words are frightening. I don’t mean to scare you. I do, however, hope to motivate you to action. You must plan! Put your excuses aside and take control over your own mortality and over the future of your family. Leaving it for later may mean never getting around to it at all.
Sometimes well intentioned clients actually go through the process of beginning to plan their estate but never complete it. It may sound crazy but some people meet an attorney, provide all the information, make the important and difficult choices, take home the drafts of the documents their attorney prepared for them to review and then never sign them.
Only signed documents count! If the documents are not properly signed, including by the necessary witnesses and notaries, the documents are not valid and cannot be probated and honored by the court. I have had many clients meet me for an intake and express their wishes. After the meeting they ask innocently, am I now protected? What happens if I die before we complete the process? The simple answer is no. They are not yet protected and their mere expression of their wishes and desires counts for nothing.
Don’t fail to plan.