Let's Talk Estate Planning with Partner, Barbara Butler
Do I need an Estate Plan?
In a word, yes. Even if you feel you “don’t have much” or your family is one where everyone gets along and there likely won’t be any issues, situations arise where everyone could benefit from a thoughtful and complete estate plan. A typical plan would include Wills and Medical and Financial Powers of Attorney.
But why would you need a plan? For instance, many people wrongfully assume that if they are incapacitated, their spouse would automatically be allowed to make medical decisions for them. This is not true. Although the medical professionals will do their best, it is much better for all involved if you have a valid, current medical power of attorney that clearly names your agent, often your spouse, as the person entitled to make decisions on your behalf. A proper Medical Power of Attorney would also allow the doctors and nurses to share your medical information with your agent. Further, if both you and your spouse were incapacitated at the same time, in a car accident, for example, who would be making decisions for you? It is far better to have these issues spelled out beforehand than to leave your family to scramble in an emergency.
Similar to a Medical Power of Attorney, a Financial Power of Attorney would allow your agent to manage your financial well-being while you are incapacitated. This person could take care of paying your mortgage, applying for insurance benefits, or making sure the heat and lights stay on in your home while you are recovering.
Powers of Attorney provide for someone to act on your behalf while you are alive. They expire upon death, and then your Will (if you have one) controls what happens to your assets. A will might not be terribly important for a “traditional” family (spouses and no step-children). If you intend to leave everything to your spouse and then be divided equally among your children, that is what the law provides if you don’t have a Will. But, what if you have step-children? If you die first and leave everything to your spouse, will they then include your children in their estate plan? It’s hard to say. The law makes no provisions for step-children, regardless of how long they have been in your life. Often, it is a matter of trusting your surviving spouse to “do the right thing.” However, your surviving spouse may become frail and vulnerable to manipulation as they age, and then it isn’t a matter of whether you “trusted them completely.” The final disposition of your assets could come down to whether the survivor has an opportunity to change the plan you two may have put together, and what factors may be influencing them in the future.
If you think you are too young to bother with estate planning, think again, especially if you have children. What would happen to your children if both their parents were suddenly incapacitated or deceased? Would there be a family fight over who gets to raise the kids? Would there be more family arguments over what to do with your estate, which would now likely belong to your children, but they are too young to manage it themselves. If you are divorced and something happens to you, your children would likely be raised by your ex-spouse, but if you do not prepare, your ex-spouse would also likely be in charge of any assets your children inherited from you. These are important questions that deserve your thoughtful answers—followed by actions such as the completion of a nomination for guardian(s) for your children and the establishment of a trust for their benefit.
What if you don’t have a spouse? The law allows you to name pretty much anyone to act on your behalf, both while you are alive through your Powers of Attorney, and after you pass away. The person(s) you select should be someone who knows you, someone you can count on to see your wishes through, and someone who has the ability and willingness to take on these tasks. It can be a child, sibling, neighbor, or best friend … they just need to be someone you trust. If you don’t have anyone you wish to burden with the task of settling your estate or managing your money (and sometimes this can be very burdensome), there are professional fiduciaries available who can help.
What happens if I don’t want to go to the expense and bother of putting together an estate plan? Well, if you don’t take care of these planning matters, the law will make your decisions for you. Generally, your spouse will be able to act on your behalf, but your family may have to go to court and ask a judge to appoint someone as your guardian or conservator so that they have the authority to take care of you and your finances. This is an expense that can be avoided. There is also a risk that the person appointed may not be the one you would have preferred.
If you don’t put together a Will, the state will determine who receives your property. A common misconception is that the “state will get everything” if you don’t have a Will. This may be true in other states, but in Colorado, that law provides for intestacy (without a Will) distributions. Broadly speaking, your assets would go to your spouse, if living, then to your children - if you have any. If you don’t have a spouse or children, your assets would go to your parents, if they are around, and if not, then to your siblings, or on to your nieces and nephews, or even further out your family tree, to cousins until an heir is found to inherit. This can be very expensive and may not be what you want at all. Perhaps if your entire family is gone, or you are not close with any of them, you may wish to leave your assets to a charity or religious organization. This would not happen without a Will.
We can help you work through these questions. We can assist you with steps to potentially avoid probate or other court actions, ensure that your wishes are followed, and give you and your family some peace of mind.