This week is National Estate Planning Awareness Week 2013! In 2008, the National Associate of Estate Planners and Councils (NAEPC) worked with Congress to pass a resolution to proclaim the third week of October as National Estate Planning Awareness Week. The resolution stated “Many Americans are unaware that lack of estate planning and financial illiteracy may cause their assets to be disposed of to unintended parties by default through the complex process of probate.” Then resolution further states “careful planning can greatly assist Americans in preserving assets built over a lifetime for the benefit of family, heirs, or charities.”
According to a 2010 survey of industry trends conducted by WealthCounsel, one of the most common reasons people create estate plans is to save their family and loved ones the chaos, cost and conflict that often occurs after someone becomes incapacitated or passes away. Other common reasons people engage in estate planning is to ensure that their children receive their inheritance in a way they see fit, protect children from mismanaging their inheritance, and shielding assets left to children from creditors and predators (ex-spouses, fraudsters, etc.).
Despite the enormous benefits of a well drafted estate plan, estate planning is often overlooked when considering personal financial management. Over 120 million American adults do not have created an estate plan to protect themselves and their families in the event of sickness, accidents, incapacity or death. The cost of creating an estate plan can be very reasonable, especially when compared to the wasted money and hardship that can be minimized with a well drafted plan. Read more about the our fixed fee estate plans.
Why is estate planning so often overlooked? The 2010 survey found that 62% of respondents believed that many Americans don’t need to create an estate plan because they had the erroneous assumption that estate planning is only for wealthy people. Here’s the truth about estate planning: you already have an estate plan. Everyone has one. Their state of residence has created one for them. However, this “plan” often has results that are far different from what someone would have wanted. The misconception that only rich people need estate plans has caused considerable strife and discord within many families along with lots and lots of legal fees paid to lawyers for the fight.
All adults, regardless of their age, should create estate plans. Read the September 27, 2011 article in U. S. News & World Report entitled “What You Need to Know About Estate Planning” which highlights the importance of single 20-somethings creating an estate plan that includes healthcare directives in the event of unexpected injury or illness.
Estate planning is particularly important for young families, as they are the ones who stand to lose the most – their young children. In both parents were to pass, who would care for the children? Who would handle the affairs of the estate and ensure that property is transferred according to the deceased parents’ wishes? If the parents did not create an estate plan or will, the courts of their state of residence will appoint a guardian for the children. The guardian may or may not be an individual who does not share the values and beliefs of the deceased parents.
Estate planning is especially critical in blended families. In the event of divorce and remarriage, how does a parent ensure that their assets pass to their children and not the new spouse and the children of their new spouse? How does a step-parent pass assets to a step-child that he or she has not legally adopted? These things simply cannot be accomplished without an estate plan. Arizona law is not kind to blended families.
What if the family breadwinner unexpectedly passes? Did the individual have enough life insurance to cover income replacement to support the surviving spouse and children who were dependent on the deceased for their maintenance and support.
Families with children or other dependents with special and educational needs must be especially mindful of creating an estate plan. Without an estate plan, one could unwittingly rob their special needs dependent of government benefits and entitlements.
Arizona estate planning lawyer Abigail Neal has helped many individuals and families protect themselves and their families and create their legacies. Call Powers & Neal at (480) 699-7992 today to get started on your plan.