People put off estate planning for many different reasons. Some may not want to think about the inevitable future of getting older and passing away. But for most people, it is just plain old procrastination. When it comes to estate planning, the consequences of procrastination can be severe, potentially leading to unintended outcomes, legal disputes, and significant financial losses for your loved ones. Why put off until tomorrow what you can accomplish today? Let’s explore the reasons to take action sooner rather than later when it comes to creating your estate plan.
Unintended Beneficiaries Through Intestate Succession
Intestate succession is what will happen if no plan is created. Simply put, you will rely on the laws of the state to pass on your assets to your heirs. One of the most significant risks of intestate succession is the possibility of unintended beneficiaries receiving your assets.
For example, I met with a person a few years ago who was going through a divorce. This was a second marriage, and this person had children from the first marriage. We discussed the need to update their estate plan now–don’t wait because it may be years before the divorce is finalized. Unfortunately, this person procrastinated, and passed away while the divorce was still pending. Still legally married, the spouse was entitled to a large portion of the estate, leaving the children confused and angry. This could have been easily avoided!
Family Disputes and Legal Battles
Without a clear estate plan, family members may disagree on the division of property, leading to expensive, lengthy, and emotionally exhausting court proceedings. These disputes can not only deplete the estate’s value but also irreparably damage relationships among your loved ones. I handled a probate estate for a man who was unmarried and had close to $1 million in assets when he died. But he had no will or trust. After two years of estate administration, his sister and brother were expecting a hefty inheritance, only to be blindsided by a son, who nobody knew existed! DNA proved the man to be the natural child of the decedent, and he walked away with the entire estate. There was nothing the rest of the family could do about it.
Probate Delays and Expenses
Lack of proper estate planning can result in a need for probate, which is typically time-consuming and expensive. The probate process can take months or even years to complete, during which your loved ones may face financial difficulties due to delayed distribution of assets they may need, and the probate process opens up your estate to legal challenges. Will contests in probate court are common, but at least when a will exists, the decedent’s intent is clear. When there is no will, and particularly, when oral promises are made to loved ones, the heirs may engage in contentious and expensive litigation in an effort to “get what they [think they] deserve.”
Loss of Control Over Financial and Healthcare Decisions
Estate planning documents not only address what happens to your assets when you die, but also what happens to you and your property if you become incapacitated. Without a durable power of attorney and a healthcare power of attorney, your family members may be forced to petition a probate court for guardianship or conservatorship over you. They may be forced to make gut-wrenching decisions about your medical care without knowing your wishes. This can lead to conflict among family members and potentially result in you receiving care that goes against your personal beliefs or desires.
Cost of Estate Planning vs the Co$t of Procrastination
One of the other reasons people put off estate planning is the cost. But the cost of procrastinating far outweighs the initial expense of working with an experienced attorney to establish an estate plan.
Probate is both time-consuming and expensive. On average, probate costs range from 3% to 10% of the estate’s total value, depending on its complexity and whether disputes arise. For example, for a $500,000 estate, this could mean costs of $15,000 to $50,000 or more, including court filing fees, attorney fees, executor fees, and other administrative expenses. Additionally, probate takes a minimum of six months, but often several years to complete, causing delays in asset distribution and potentially creating financial strain for beneficiaries.
However, by creating a comprehensive estate plan—such as setting up a living trust—can help avoid probate altogether. While the upfront cost of an estate plan typically ranges from $4,000 to $7,000 for a trust or $1,000 to $2,500 for a will plan, these expenses are significantly lower than the cumulative costs of probate. Moreover, bypassing probate spares your loved ones the hassle of navigating court proceedings during an already emotional time. Moreover, legal fees typically increase by 3-5% each year, so procrastination will always cost you more!
Don’t Procrastinate, Speak With An Experienced Estate Planning Attorney in Rhode Island Now
The consequences of procrastinating on your estate plan can be far-reaching and potentially devastating for your loved ones. By taking action now to create a comprehensive estate plan, you can ensure that your wishes are honored, your family is protected, and your assets are distributed according to your preferences. Don’t wait for a medical diagnosis or life-changing event to motivate you – the time to plan is now.
Remember, estate planning is not just for the wealthy or elderly. It’s a crucial step for anyone who wants to protect their legacy and provide for their loved ones.
If you have not yet walked down the aisle, consider creating a prenuptial agreement (“prenup”). This is a binding contract between you and your future spouse which spells out how your assets will be divided should the marriage end in divorce. This agreement can also be a crucial component of your estate plan.
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