Why You Need An Estate Plan, & What To Expect

As I learned from hands on experience this summer, one of the most important steps a business owner can take is to ensure that their personal estate is in order, so that their failure to plan personally does not have a ripple effect on their business. 

A shocking amount of families do not have their estate plan in place (one study by Caring.com estimate that 58% of adults in the United States don’t have a will or living trust- in other words, and estate plan). 

More than this, recent cases in pop culture further highlight this issue. In the summer of 2018, Aretha Franklin passed away without a will, leaving an estate estimated at $80 million.

Why does it matter if you have an estate plan?

To be blunt: if you don’t, your assets will go through the state’s automatic procedure called “probate”, which is the state’s way of determining the where/whys/what’s and hows of how your estate will be distributed.

This means that your heirs (even if everything is amicable), will have to hire attorneys to represent themselves, and the process will take time. For example, Prince’s estate took his heirs years to settle his estate…which also means years of legal bills

If an estate plan is so important, why not just use a cheap online service to draft up your will? For starters, you don’t want to have a will only. This subjects your remaining family members to the probate process discussed above. Second, I cannot tell you how heartbreaking it is to walk a grieving family through the process of having to go through probate to sort out what their deceased family member wished to have happen with their estate….except, said family member decided to go the cheap route. Cheap actions = cheap results. Something as important as your estate, and protecting your family when you’re not here to do so yourself, warrants critical consideration. Critical consideration occurs when you actually sit down with an attorney to get your affairs in order….not a computer program.

What documents do you need to have an established estate plan (personally?)

So what do you need have to have a satisfactory estate plan?

  • First, you need to consult with an attorney in your state to see what options will be most appropriate for you
  • Second, you should consider forming a trust. According to Black’s Law Dictionary, a trust is “an arrangement whereby a person (a trustee) holds property as its nominal owner for the good of one or more beneficiaries.” Think of it this way: it’s comparable to creating a “corporation” that holds your assets for you. In literal terms, its a document that will explain exactly what you want to happen with your assets when you pass. Everything will be predetermined, so that your heirs are not left with disputes during such an emotional time.
  • Third, you should consider what is called a “pour over will”. This is a document that essentially states that anything you might have accidentally left out of the trust should be distributed according to the terms of the trust.
  • Finally, you need to make sure you have two incredibly important documents: an Advance Directive, which Black’s Law Dictionary defines as a “written statement of a person’s wishes regarding medical treatment, often including a living will, made to ensure those wishes are carried out should the person be unable to communicate them to a doctor”, as well as a Power Of Attorney, in the instance that someone needs the ability to make decisions for you. 
  • Like I said, these are all conversations that you need to have with an attorney in your jurisdiction. I merely want you to know that if you do NOT have an estate plan in place, your estate would be subject to probate; which can mean that you are leaving your family (including your children) with the travails of probate. 

What documents do you need to have an established estate plan (business?)

Finally, if you are a small business owner, you also must consider how your business plays into your estate plan, and into your estate planning. I’ll be breaking this down in detail in a later post, but for the time being, what questions do you have about the estate planning process? Email me at hello@paigehulse.com.

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