Retirement planning is what we do on a daily basis, but there’s one thing we come across frequently that astounds us: people with millions of dollars in assets don’t have an estate plan. If you’re in this group or simply don’t have an estate plan in place, it’s time to start thinking about one.
No one wants to think about their demise, but it’s one of the certainties of life.
We had the opportunity to sit down with Andres Mazabel from Trust & Will* to discuss how to create an estate plan without stress. However, before we go into the process of estate planning, we must answer one fundamental question.
Why Do People Avoid Creating an Estate Plan?
We see many people, smart and wealthy people, who don’t have an estate plan. Even if you’re not a millionaire, an estate plan is a very beneficial tool to have in place. The main reason that people seem to overlook this tool is that they’re not educated on the importance of these plans.
In fact, most individuals don’t fully understand:
- What an estate plan offers
- What goes behind an estate plan
- The options they have available
- How to create an estate plan
Sure, we see many people just put off their plan until a later date because “they don’t have time,” but most people don’t have an estate plan because they don’t understand it and they’re expensive.
People don’t want to spend $2,000 to $5,000 (sometimes less, sometimes more) to create an estate plan.
Also, people don’t want to talk about death. Ironically, the pandemic has started to change this perspective because people are realizing that an estate plan helps ensure that a person’s family is taken care of upon their demise.
Probate can cost thousands of dollars and months of time if you pass without having these documents in place.
Documents Everyone Should Have as Part of an Estate Plan
Estate plans aren’t just for the wealthy. In fact, even if you have minimal assets, you should still have an estate plan in place. A few of the many documents that should be part of your plan are:
- Will-based plan. A will-based plan is the most basic form of an estate plan because it outlines the beneficiaries of your assets and the executor of your estate. You can also assign a legal guardian in your will who will be responsible for your child’s wellbeing.
- Power of Attorney. If you’re incapacitated, a Power of Attorney will allow a person to make a decision on your behalf.
- Living Will or Healthcare Directive. Estate planning isn’t just about death. If you’re unable to make your own medical decisions, a living will can outline which medical intervention and procedures you want to take place. HIPPA authorization can also be created to allow a loved one to know about your health condition.
- Trust-based. Many people will create a trust-based estate plan, especially if they have more assets. The plan allows you to dictate what happens to your estate and when. For example, you can distribute money to your child when they graduate college or reach a certain age.
Trying to secure your retirement is a good thing, but you need an estate plan to dictate what happens when you’re no longer here. You worked hard for all your assets, and an estate plan empowers you to leave these assets to others.
It’s crucial to understand that an estate plan evolves as your circumstances change. Your estate plan today will likely not be the same 10 years from now. Therefore, when you draft an estate plan, it’s crucial to update the plan throughout your lifetime.
Perhaps you don’t want your dear aunt Sally to become your child’s guardian anymore.
You can change that in your plan.
State Specific Estate Plan Updates
Every state has its own specific language that helps outline estate planning requirements. While the language doesn’t change much from one state to the next, you’ll want to have a local attorney overlook the plan for you if you do relocate.
Federal and state-specific changes may be made, and something as simple as a change of Power of Attorney form needs to be addressed.
For example, New York changed its Power of Attorney forms last year, so filling out the new form was a necessity for anyone who had an estate plan in place already.
Even if you haven’t moved states, you should have someone look over the plan every five years to ensure that it meets current requirements. Plus, your wishes may change, and a quick review can help you keep your wishes up to date.
How Long Does It Take to Create an Estate Plan?
Time is a major factor when creating an estate plan. Often, if you have all your documents and wishes available, you can complete the plan within a single visit to a lawyer. However, if you use a platform like Trust & Will, you can complete the estate plan in 30 to 45 minutes.
Trust & Will is the TurboTax of estate planning and allows you to create:
- Trusts
- Wills
- More
And the platform has all the crucial documents that go into an estate plan mentioned previously in this article. Lawyers and additional help are provided through the platform if you need more assistance.
We use Trust & Will for our clients who are working on their retirement plans but don’t have an estate plan in place just yet.
Of course, you can also go through your own lawyer to have your documents drafted.
The most crucial thing is that you sit down and really draft up your estate plan. Spending 45 minutes or less today can help save your estate months of hardship if your estate goes into probate because you didn’t have these documents in place.
If you haven’t already, we hope that you’re thinking about creating an estate plan today.
If you want to listen to other experts, we have professionals on our podcast every Monday.