According to a recent survey, only 32 percent of Americans say they have a will or other type of estate planning document.1
Here are 4 reasons why you should have an estate plan.
Many people think an estate plan deals exclusively with large financial assets. But that’s only a part of it. “A good estate plan includes deciding who would make decisions for you with regard to your finances and your health, no matter your age or level of wealth. That’s something that a lot of people might overlook,” says Nancy Hermann, vice president and regional trust manager at U.S. Bank.
For example, if you’re moving away from family for the first time, “it’s important that you designate someone to make healthcare decisions should something happen — preferably someone local,” says Hermann. An estate plan includes provisions for what happens in an accident or injury in which you become disabled; these plans aren’t just in case of death.
“Also, should a health emergency or accident happen, it’s important to plan for the assets you do have,” Hermann says. “Most of the time people have more than they think they have. This includes the value of a home and retirement plans, investment accounts, brokerage accounts and bank accounts.”
The most basic documents should include:
Hermann advises clients to spend time thinking through their goals. Closely following that is appointing people to play key roles for “in the event of” scenarios. Here’s Hermann’s advice to consider and discuss with your attorney:
Not accounting for what happens to your assets can open you and your loved ones up to risk. “If you don't have a plan, the state that you live in has a plan for you,” Hermann says. “If you were to face an untimely death, the statutes of the state where you reside will dictate the terms of your default plan. The courts will appoint an administrator to settle your estate, which can be an expensive process, and one that you would obviously not have control over.”
Estate planning includes a large number of legal and financial documents. Consulting a financial professional who will look at your life holistically and work with your tax and legal advisors to account for finances, life situation and values can make the process feel more manageable.
Plus, a financial professional may make your trustee’s life easier by handling many administrative burdens that can sometimes be overwhelming. Regardless of your finances or age, talking with a professional about your estate plan can help ensure your loved ones are cared for if anything were to happen to you.
When it comes to getting started, “there’s no time like the present,” Hermann says.
Review important life milestones that could impact your estate planning and learn what to account for during each.