Whenever I’m fact-finding in order to understand a new client’s position, I will ask what plans they have in place for their estate. Very often if the client is at the younger end of the scale they will have given the matter no thought, and I’m frequently asked whether I think they should have a plan in place.
Death is a subject that most of us like to avoid, and in particular the prospect of an early death. In reality it does happen though, and it is wise to give consideration to all possible outcomes when planning for the future.
Some people may genuinely not care what happens to their estate after they pass, but in my experience the majority have an idea of how they wish for their wealth to be divided and assuming this to be the case there is no good reason not to put an estate plan in place today.
An estate plan is essentially a strategy to take care of the people you care about, and should achieve a few key goals:
- Determining what should be transferred to whom and when
- Fulfilling the legacy you wish to achieve
- Empowering the right people to take the actions needed to achieve the above
It’s important to remember that you essentially have an estate plan even if you haven’t formally crafted one. The law makes provisions for who property passes to when someone dies without a formal estate plan, the specifics vary depending on jurisdiction but the state will determine the person deemed to be the ‘closest relative’ of the deceased and they shall inherit the estate in full.
For many people this is perfect, and if you are happy for the person deemed to be your closest relative to inherit your estate in its entirety then you have no need to make more extensive plans. On the other hand, some people have a specific wish that those legally deemed to be closest to them do not inherit their estate, and in this case drafting an estate plan should be an immediate priority.
Considerations beyond death
The first thing people think of when they consider estate planning is of course death, but there are other factors to be considered beyond end of life plans that also form part of your estate plan.
Under the laws of guardianship, if someone is incapable of making decisions for themself due to an inability to communicate or a loss of capacity, someone else must make financial and health care decisions for them. The process of choosing that decision maker is known as “guardianship appointment.” Someone, generally acting through an attorney, petitions the court to be appointed as the “guardian of the person” (the health care decision maker) or the “guardian of the estate” (the financial decision maker).
Minor children of parents who pass away are legally incapable of making their own decisions and managing their own assets. Therefore, those children need to have a guardian of the person and a guardian of the estate appointed. A judge will decide who is appointed to each role.
In both cases a judge is highly likely to appoint the people to these roles that you have chosen in your estate plan if one exists (very rare exceptions exist, for example when the person appointed is now incapacitated themselves). Without an estate plan in place it is down to the judge’s discretion as to who should appointed to these roles.
Time to put plans in place
Given the information provided above, there are many valid reasons for crafting an estate plan sooner rather than later.
For in-depth advice on the options available and the best way to secure our legacy, contact Bell Capital today.
