On October 31, 2012

There are plenty of reasons why people fail to plan what will become of their assets and possessions after death. Some are uncomfortable thinking about the end of their lives. Others assume that their lack of descendants or valuables means that there will be nothing to sort out after they die. Still others are so flummoxed by the complexities of estate planning that it’s easier for them to just keep putting it off. But none of these reasons should prevent someone from going though this vital process.

Even young, single people with no children should take some time to think about their estate. If you do nothing, a probate court will have to take the time to determine who should receive anything in your bank or retirement accounts, which can be both lengthy and expensive for your immediate family members. Also realize that if a sudden accident or illness renders you incapacitated, someone must be appointed to make health decisions for you. Wouldn’t you rather determine who that person will be than have someone else decide for you?

If you do get married, some decisions about your assets will be made automatically. But if you’re in a relationship with someone whom you can’t or simply don’t tie the knot, you’ll need to complete a trust or a will stating your wishes regarding that person and formally establish that person as your financial and medical powers of attorney, if those are your wishes.

The next step for many people is children. Most people want to leave assets to their children, and if your estate is handled by a probate court, that’s probably what will happen. But if you die while your children are still young, who will take care of them? You may have made some assumptions or verbal agreements with friends or relatives, but unless you formalize those arrangements in an estate plan, that’s all they are. In the event of your death, the people you assumed would raise your children may not be who the courts designate. Perhaps one of your children will require a larger distribution of your assets, due to special needs or other circumstances. You’ll want to specify this in your plan, as well.

Each scenario has its own complications, but facing them head-on now will make things easier for your loved ones later.

Source: Daily Finance, “Planning for Trouble: Money and Estate Tips for Every Age,” Dan Caplinger, Oct. 17, 2012

Categories: Estate Planning

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