The biggest estate planning mistake that most people make is not making an estate plan. Shockingly, less than half of American adults report having a will or other estate planning documents. Why?
Here are four common reasons.
You may think your estate plan has to be the final word about how you want your estate to be administered and you’re just not ready to make such huge decisions. But an estate plan is something you create for right now with what you currently have, what your thoughts are for giving it away, and whom you currently want to give it to. Next year, all that can change. All you have to do at that point is to revise your plan. Once you’ve made your first plan, the next one becomes much easier.
Disagreement with a spouse or partner.
Sometimes spouses and life partners disagree on whom they want to name as beneficiaries. This situation is particularly common with second marriages and blended families. Although each person is free to have his or her own will, they should generally agree about the inheritance of their children. Otherwise, it is often the longest surviving spouse who gets the “final say.” Consider working with a mediator or neutral third party facilitator to achieve a compromise you both can live with.
Belief that it’s too soon.
Young people think they have time on their side. However, often young people are the ones who need a will the most, especially if they have young children. You can use a will to designate who will care for your children and be their legal guardian should you and their other parent both die. In your will, you can name a guardian or set up a trust to manage the assets you leave for your minor children until they become of age. A will is just one part of an estate plan Often young people overlook health care directives and financial powers of attorney. You may think you do not need these documents until you are old or seriously ill. But an incapacitating accident can strike at any time.
Procrastinating until it’s too late.
It’s easy to postpone estate planning thinking you’ll be able to do it next month, next year, after you retire or reach some other milestone. But will you? To make an estate plan, you must have a certain level of mental capacity. Once you lack capacity, whether a consequence of aging, illness, or accident, your family is left with few options. If you do not have a trust with an incapacity clause and/or a financial power of attorney, the only way a loved one can obtain the power to make decisions for you is to be appointed your guardian or conservator by a court. This takes both time and money. It also does not guarantee that your wishes will be carried out.
If you die without an estate plan, your estate will pass to your relatives according to your state’s intestacy laws. They are inflexible and there’s little your loved ones can do after your death to change the result, outside of disclaiming (giving up) an inheritance so that it can go to the next relative in line.
In Texas, specifically, if a you are single and die without a will in Texas, your property will be distributed as follows:
Your estate will pass equally to your parents if both are living. If one parent has died, and you don’t have any siblings, then your estate will pass to your surviving parent.
However if you do have siblings or descendants of siblings (nieces and nephews), then your surviving parent would receive only half of the estate. The remaining one-half would be divided among your siblings or their descendants.
All of your estate would pass to your siblings or their descendants if you have no surviving parents.
If you have no surviving parents, siblings, or descendants of siblings, then the estate will be divided into two halves. One half will pass to relatives on your mother’s side. The other half will pass to relatives on your father’s side.
If one side of the family has died out, the surviving side of the family would inherit the entire estate.
On rare occasions, when an unmarried person dies without any surviving heirs, his estate will pass to the State of Texas.
Perhaps you have a close friend who you would have wanted to share in your estate. That would not be possible without a will.
In some states, if you have no close relatives, your estate could go to people you have never met. It’s even possible that money from your estate will need to be spent locating your heirs and confirming their relationship to you.
In your estate plan, you may want to provide for a partner to whom you are not married; leave something to a friend or loyal caregiver; make a donation to charity; leave unequal shares to your children, or even disinherit a child. You need a will or a living trust plus a will to accomplish these goals.
A will or living trust is even more important if your affairs are complicated by stepchildren, property overseas, ownership of a business, or potential estate or inheritance tax liability. By writing an estate plan, you can ensure your wishes are carried out, costs are minimized, there are adequate financial and guardian provisions for dependents, and you have clearly identified who is to receive what property.
Please call my office to schedule your personal consultation with me. I look forward to meeting you and learning how I can help you define and achieve your estate planning goals.
For my booklet, “A Guide to Putting Your Affairs in Order, scan the QR code below or call our office and ask for Catalina to send you a copy: