Estate Planning is for You
Estate planning may sound like the domain of the very wealthy, however, in the eyes of the law, an estate is simply the aggregate of property an individual owns, and most everyone owns something. Property ownership includes individual as well as jointly owned bank accounts, stocks and bonds, retirement accounts, real estate, jewelry, vehicles, your online digital footprint, and even pets. Short of being utterly destitute, you have an estate, and planning for it helps to protect yourself, your family, and your loved ones.*
According to Caring.com, fewer Americans than ever are engaging in estate planning. The number of adults who have a will or other types of estate planning documents has fallen nearly 25 percent since 2017. Astonishingly, the demographic of older and middle-aged adults is less likely to have wills and estate plan documents at roughly the same 25 percent rate. Additionally, a growing number of Americans lack the resources and knowledge as to how to get a will. Overall, the prevalence of estate planning documents since 2017 has shown a decrease of almost 25 percent.
In their annual survey, Caring.com posed the question to its participants as to why they have put off having estate planning documents, and increasingly people cite a lack of education or the perceived cost of estate planning as the most significant reason. Yet 60 percent of the same respondents think planning their estate is either somewhat or very important. Data shows that as a person's income increases, their likelihood of having estate planning documents like a will, living trust, or advanced health care directives also increases. Still, the number of people with said documents continues to decrease, even in higher-income groups.
In 2020, a study of participants in the highest income group shows a decrease of 26 percent regarding estate planning documents. Even those Americans with the resources to create a will feel it is something they can put off until later in life, which has disastrous consequences for their loved ones in the case of unexpected death.
Estate planning is the process of outlining specific instructions as to how you want your money, and other property dispersed upon your death. It includes decisions about your medical care and final arrangements as well. Wills and trusts are two of the three primary estate planning documents you need to understand and put into place as soon as possible.
A will instructs how to divide up assets, debt, personal property, and more. A will can cover all of your estate planning needs however, it does come with a few limitations. First, a court process called probate must be started upon death. During this sometimes lengthy process, a judge oversees the transfer of ownership of your property according to your will. Once probate is opened, the will becomes public knowledge, as well as the property that the deceased owns. For those who wish to avoid court or who wish to keep their affairs private, a living trust may be the best option.
A living trust takes effect at the moment it is enacted while your will only becomes effective upon your death. Planning with a living trust can more expensive, but it provides the advantage of avoiding probate court and keeps all of your information (and your beneficiaries’ information) private. Further, a living trust can provide for the management of your assets should you become disabled.
Next week I will discuss the third critical estate planning document and deals with probably your most important asset during your lifetime.
If you are ready to discuss your estate planning needs, we would be honored to help. If you have an existing plan, we would be happy to review that plan to make sure it still works for you given your current health and financial circumstances. Give us a call at 301.892.2713 or click here for an easy and convenient way to schedule your consultation. For your safety and ours, we are still taking precautions and limiting initial consultations to videoconferencing. We know it is not the best way to begin a long-term relationship, but it is the wisest. We look forward to hearing from you!
"Living with your bags packed!"
Next week, I discuss why the most important aspects of estate planning have nothing to do with propert.