Why do people avoid estate planning? A recent study found that some estate holders believe they don’t need an estate plan. They think a spouse or their children will automatically receive any assets they have. Others claim estate matters are too complicated to deal with or estate planning is too expensive and others say it simply takes too much time.
Perhaps that’s why that same study found as many as 92% of all adults under age 35 do not have a will. Death is not even on their radar. But not all death occurs in advanced age, nor is it always anticipated. Sometimes it is sudden and unexpected. When death occurs as a result of a car accident, a work-related mishap, a gunshot wound, or other unfortunate event, the best laid plans, undocumented, go up in smoke.
When you fail to engage in even a minimum of estate planning, you may be surrendering control over vital healthcare and financial decisions to people you do not know: People who have no knowledge of you or your desires regarding end-of-life care or finances.
When a serious accident occurs, many assume the responsibility for financial and healthcare decisions falls to their parents. They could not be more wrong. Once a child reaches age 18, their parents no longer automatically have the legal right or obligation to act on their behalf. New adults should execute, at a minimum, a financial power of attorney, a healthcare power of attorney, and a HIPAA release.
A financial power of attorney, sometimes called a durable power of attorney for finances, appoints someone to manage finances if a person becomes incapacitated and is unable to make financial decisions on their own. Similarly, a healthcare power of attorney appoints someone to make decisions about matters involving healthcare, including end-of-life care and organ donation. The HIPPA (The Health Insurance Portability and Accountability Act) release authorizes health care providers to disclose information regarding a medical condition and treatment to third parties. All of these documents provide legal control to a person or persons trusted to act in your best interests.
Sample forms for these three documents are available on the Internet. However, appropriate information must be provided, and the forms signed and witnessed as instructed.
Obviously, once an adult acquires significant assets or marries and has children, the need for more comprehensive estate planning kicks in.
Under California law, when a resident dies without a will or trust, the laws of intestate (without a will) succession apply. The State of California, not the estate owner, determines who inherits the estate. For example, under the law, a spouse will receive all of the community property. But if other heirs exist, the spouse will be required to share in the distribution of separate or personal property. In addition, access to financial accounts titled only in the name of the deceased, such as checking and savings accounts, may be frozen until the estate goes through probate. Quite literally, a spouse and/or dependents could be deprived of any financial support, and face homelessness or bankruptcy.
If a resident is not married, the state had a preset formula for distribution of property, regardless of the estate owner’s actual desires. Long-term partners or significant others, even those who share a home with the deceased, have no claim on the deceased’s estate. Without an estate plan, they will receive nothing.
Dying without a will or trust takes away your right to make these decisions:
- How your assets should be distributed upon death.
- The continuing financial support of dependents or a spouse.
- Guardianship and/or education of your dependents.
- How unplanned expenses for costly medical care will be paid.
- Whether your spouse or dependents will have access to checking, savings or other financial accounts to pay essential living expenses.
- Who will inherit a business or partnership interest.
- The appointment of executors and legal representatives to carry out the provisions of your estate plan.
- Funeral arrangements and interment.
In the case of sudden or unexpected death, an estate plan protects your interests, as well as those of your family. Now one can predict when the end will come. That’s why it is so important to have appropriate estate planning documents drawn up and in place.