“What's the worst thing that can happen if I get sick or pass away without an estate plan in place?”
This is a common question we receive, especially from those in close-knit families who believe that their kids (or other loved ones) will peacefully sort everything out when they pass away without needing any additional legal documents or guardrails in place.
The truth of the matter is that without a plan (or even the wrong plan) you make things much harder for the people you care about, even if everything goes as smoothly as possible and everyone gets along. Managing your affairs will also become much more costly and more time-consuming than they need to be if something happens.
Remember, you are not obligated to create an estate plan; the state already has a plan that your loved ones will be forced to follow in the event you do nothing. However, this “default” plan is not one that very many people like. The only way to override the state's plan is to legally create one of your own.
Keep in mind, however, that a comprehensive estate plan needs to include more than just “death planning.” Deciding who gets what when you are gone is only just one piece of the puzzle.
That's because if a crisis happens during your lifetime and you don't have a plan, you run the risk of losing flexibility, and you may even lose control. Even if your loved ones want to help if you get sick or become incapacitated, they could be barred from getting involved with your affairs because of privacy or HIPAA laws. If that happens, all decisions about your care and your future will be made by a judge who doesn't know you or what is important to you.
To avoid this outcome, which is called a guardianship, every adult should have planning in place that legally addresses the following questions:
- Who can make healthcare decisions if you are ill or incapacitated but don't pass away?
- Who can do you trust to make financial decisions and manage your assets when you are no longer able (remember, a will only takes effect after death. You'll need specific documents to give others authority—including your spouse--to deal with accounts solely in your name)
- What are your wishes for long-term care, and are there plans in place to pay for such care when you need it? (hint: most long-term care costs are not covered by private insurance, and your family could be on the hook for $8-10,000 per MONTH in expenses!)
The bottom line is that an estate plan is a roadmap that's designed to make life as easy and hassle-free as possible for yourself and your loved ones in the event of illness, incapacity, or death. It's one of the most loving gifts you can give them. If this article has caused you to rethink your choice of going with the state's plan for your affairs, we are here to help you. Simply contact our office at 260-969-1177 to schedule a complimentary consultation.