With the new school year approaching and your child heading off to college, you've likely…
An estate plan is a lot of things. It is a financial plan that helps you map your way from early adulthood to post-retirement. It is a security blanket that ensures a trusted loved one or advisor has been designated to manage your medical and financial affairs should you suffer incapacitation. It is a guide that assists with your business’s continued success after you are gone. And, of course, it is a set of instructions that dictate how your assets should be distributed upon your death.
Most folks only associate estate planning with the lattermost purpose described above and so, understandably, might think that having no heirs means no need for an estate plan. This is flawed logic not only because an estate plan serves so many other purposes but because while you may have no one to whom you wish to pass on your assets, you surely have people to whom you don’t wish them to pass.
When you die without an estate plan, your assets are distributed according to your state’s intestacy laws. While these vary, the inheritance hierarchy is fairly standard. Lacking instruction from a Will, your assets will pass first to your surviving spouse, your children, and then grandchildren. In their absence, they will go to parents, grandparents, siblings, nieces, nephews, and so on. If none such relatives exist, they may even pass to the state.
No matter its size, your estate represents your life’s work and as such deserves to end up somewhere you choose, and not the decision of some law. In the absence of heirs, you might consider designating a friend or charitable organization to inherit your assets. You might even consider philanthropic options including a charitable remainder trust, donor-advised fund, or private foundation. When assessing these different possibilities, it is important to speak to an experienced estate planning attorney about the tax implications of each.
It’s Not Just About Money
As mentioned above, estate planning is about more than deciding where your money ends up. While retaining control over these decisions is important, so too is retaining control over your health and finances while you are still living. A healthcare directive and durable financial power of attorney achieve both of these objectives.
- Healthcare Directive
This document allows you to designate a trusted loved one or advisor to make medical decisions on your behalf should you, say, end up incapacitated during a car accident.
- Durable Financial Power of Attorney
This document allows you to designate a trusted loved one or advisor to make financial decisions—including basic transactions like bill payments—on your behalf in the event of incapacitation.
Just as lacking a Will means surrendering control of what happens to your assets when you die, lacking a healthcare directive and durable financial power of attorney means surrendering control of medical and financial decisions while you are living. Naturally, this is not something with which most folks are comfortable.
Contact the Estate Planning Attorneys at the Law Firm of Christopher W. Dumm