Several high-profile celebrities have passed away recently without an estate plan. Though your estate is likely not as large as Prince’s or Aretha Franklin’s, their lack of planning does highlight some important issues.
Here are five reasons creating a comprehensive estate plan protects you and your family.
Eliminates family drama and loss of money
According to Market Watch, it has been over two years since Prince passed away, and his heirs have not received any money from his estate. However, attorneys and other advisers on the case have received more than $6 million from the estate.
When you do not have an estate plan, your estate goes through probate. It is up to the probate court to decide how your finances are divided. Even if your estate is not as large as Prince’s, your heirs may still argue over its division. That will drag the process out, create drama within your family and could cost the estate substantial money.
Pick a guardian
If you have minor children, it is important to plan who will take care of them, if something happens to you and your spouse. For single parents, this is even more critical. Naming a guardian puts you in charge of making the decision about who will care for your children if the worst happens. Without these plans, it will be up to the court, and family tensions could rise, if more than one family member seeks custody of your children.
Choose a durable power of attorney for health care
You may think that if you or a spouse are incapacitated, your children will automatically be able to make health care decisions for you. However, your children may have to go to court to be granted permission to do so. Your family may also disagree about decisions regarding your care. Naming a durable power of attorney for health care will allow you to pick someone you trust to make decisions regarding your care, in case you are unable to do so. This helps ensure your wishes are respected and could prevent arguments within your family.
Ensures your assets are split how you wish
As mentioned before, without estate plans, the court will divide your assets as it deems fit. That could mean dividing your property equally among your children. While this may work for some families, there may be reasons you want to leave more property to one child. Perhaps one of your children has kids, or he or she earns less money than the others.
There may also be specific items you would like to pass on to certain beneficiaries. You may want your son to have a painting, or you may wish to pass a rug on to your daughter. Creating estate plans allows you name who gets what assets.
Allows you to give back
You may also have a favorite charity you want to give money or certain property to. Unless you stipulate this in your estate plans, these wishes will not be known.
Your estate may be a little humbler than Prince’s or Aretha Franklin’s. However, having an estate plan is important for people who want to pass on their assets and protect their children. An estate plan can eliminate family drama, and it allows you to decide who will make health care decisions on your behalf.