Like most serious matters, estate planning is a less-than-popular conversation topic. But some of the reason for this is confusion. What is estate planning, and why should you care about it? Here, we round up some of the top reasons to create and have a solid estate plan, no matter who you are.
It protects you, your spouse and your children
Put simply, “estate planning is deciding what should happen to your property at your death or should you become incapacitated and unable to manage it on your own,” said David Goldman, a Baltimore attorney who specializes in family, estates and elder law.
This can include making health care-related choices that go into effect in the event that the individual in question ever becomes unable to make property- related decisions. For those with minor children, estate planning can also entail naming guardians and custodians for the children’s assets.
The consequences of not planning can can mean your assets going where you didn’t want them going. “If a person does not plan, the state of Maryland provides a plan for them which may not match their wishes,” said Eleanor Naiman, a Baltimore attorney with more than 30 years of estate planning experience.
In Maryland, in the event of the death of a person with a spouse and no children, the spouse gets all the deceased’s assets. If there is both a surviving spouse and children, the spouse receives half the deceased’s estate and the children share the remaining half. If the deceased had no spouse at the time of death, the children share all the assets. And if there are neither spouse nor children “you start getting to more distant relatives,” Goldman said.
It can prevent feuds
Good estate planning can minimize the likelihood of intra-family fights over money. How? By appointing a single individual as “personal representative,” someone with the authority to carry out your wishes as put down in writing. If this appointment is not already set at the time of a death, the deceased’s children can argue in court over who gets it and “even good relationships can start to unravel very quickly,” Goldman said. “The more guidance that can come from parents, the better.”
It can stop irresponsible spending in its tracks
In the absence of an estate plan, a minor in line to inherit money (including life insurance policy windfalls) will gain access to the assets when he or she turns 18. And that’s not an age at which many people make their best financial decisions.
So if part of your estate plan includes the creation of a minor’s trust, you can appoint someone to manage the money until the beneficiary is a bit more mature, say age 21 or 25. Or you can have them get half the sum once they reach one age, and the other half when they reach another. “You can do anything you want, just about, with trust planning,” Goldman said.
It can save you money
Of course, the 2017 tax law didn’t leave Maryland untouched. “As the estate tax exemption has risen, tax planning has become less important for many people” and that is a mistake, Naiman said.
For the very wealthy, “there is important tax planning that can save a whole lot of money,” Goldman said. And for the very elderly, failing to do the kind of planning that can help you figure out how to pay for convalescent care can wind up costing you your life savings “in a matter of months,” Goldman said.
Experts to help you abound
Attorneys with a specialty in estate law are well-equipped to handle any questions and concerns you might have about your assets and who will get them after you’ve gone.
Estate planning can be complicated, and making a mistake in one area can lead to a sort of domino effect, making other parts of the planning that much more difficult. Attorneys with estate law specializations know “ways to do things that laypeople just won’t be aware of,” Goldman said.
Anath Hartmann is a local freelance writer.