5 Reasons You Do Not Have an Estate Plan

Most people realize that estate planning is important, but nevertheless procrastinate getting it done. Below are some of the most common excuses for delaying.

1. I am too young

It is common for estate planning professionals to say that one is never too young to plan his or her estate. I, however, believe that age alone is an inappropriate indicator. It is a combination of someone’s stage in life and their personal beliefs that should be taken into account. A wealthy, elderly lady with no family may not care one bit about what happens to her assets, while a young college kid could be worried about subjecting his family to a tough decision of disconnecting life support if he is in a hospital and incapable of a meaningful recovery. Even if you feel you are too young, if there is someone in your life you would like to be provided for in case you are gone or if you wish to save your family from a great burden, it is time to consider creating an estate plan.

2. I don’t have many assets

Many people think that estate planning is only for the wealthy. However, a New York estate over one million dollars is subject to an estate tax. One million dollars may sound like a lot, but after adding the value of your home, bank accounts, retirement accounts, and life insurance policies, many people, in fact, go over that amount. Proper and timely planning can maximize the wealth inherited by the family and loved ones. (Update: On March 31, 2014, new legislature gradually increases NY estate tax exclusion to match the federal estate tax exemption by January 1, 2019)

Additionally, estate planning is not only about your savings. It is also about making sure that the people who depend on you are not left unattended, that your affairs are managed properly if you are incapacitated, and that your medical care decisions are made based on your wishes.

3. I am not ready for making such important decisions

Making decisions about your estate or who should be handling your affairs is certainly an important task. Luckily, for most people, it is not a complex or time-consuming process. If all that is required are basic estate planning documents, this can be accomplished within one or two meetings with an estate planning attorney. More importantly, because an estate plan should evolve as a person enters new stages in his or her life, there is no pressure to create a “one for all possible scenarios” estate plan. With an exception of very few planning tools, most estate documents can be revoked, amended, and replaced.

Do not wait until you are ready. We never know when estate planning will come into play, and it is better to have a basic plan than no plan at all.

4. I don’t want to pay for it

It is certainly not the most fun way to spend money. Unfortunately, one way or another, there will be costs. Oftentimes, not planning ahead will end up costing you a lot more if you are unprepared in the future. For instance, designating an agent or a guardian in a Will or under a Power of Attorney may only cost a couple of hundred dollars, but bringing guardianship proceedings could cost thousands of dollars and weeks or months of frustration. Setting up a proper and timely estate plan can save hundreds of thousands of dollars in estate taxes and capital gain taxes. Finally, legal fees to protect hard-earned assets are significantly lower than the fees for litigating unprotected assets.

If your financial and family situation is simple, and you have a “do it yourself” attitude, there are online services that provide inexpensive alternatives for face-to-face estate planning with a professional. However, if your life involves a second marriage, persons with special needs, property in different states, businesses, special assets, or your net worth is over one million dollars, it would be prudent to seek professional legal advice.

5. I am not planning on dying anytime soon

In order to do an estate plan, you have to think about your death. Mortality is not a topic most people want to discuss. While thinking about what happens after your demise is not fun, being prepared can save your family distress and money. It can also head off destructive family fights over who gets what, that can divide family members for years to come.

I found that it helps people to compare estate planning to purchasing auto insurance or home insurance. Having insurance does not mean that you are planning to get into an accident or have your house burn down. It does, however, mean that in an event that it does happen, your losses are mitigated and the disruptions are minimized.