It's more than just a will
Estate planning can be a very challenging process. It forces us to accept our mortality and then plan for it. It also forces us to consider that at some point we may find that we can no longer take care of ourselves and those that depend on us. Unfortunately, in too many cases, it never seems important until it is too late. We recall in recent history the long drawn out saga of a woman we will refer to as Ms. M. It was a sad story of a woman who had become physically and mentally incapacitated and the surviving family members were left fighting between each other as to what was in her best interest and how to preserve her life. It developed into a bitter battle and both sides had valid interests and concerns for her. A few simple documents could have prevented this and more importantly would have been Ms. M's voice even though she wasn't able to be heard at that time.
We tend to think that if we don't have a lot of assets, or nobody that depends on us, we don't need to plan very much for our estate. The above story should illustrate the contrary. There are other circumstances rather than dying that need to be addressed through an estate plan. Living wills and medical powers of attorney are a couple of documents that are designed to help alleviate these problems. They are your voice stating your wishes if you find you are in a position where you can not be heard.
Intestate Succession and Probate
Every state in the union has a plan for you and your family should you not. It is called Intestate Succession. It is the duty of every state to provide laws governing property ownership and how that property is to be dispersed upon your passing. These laws are designed to protect beneficiaries and allow creditors for a timely accounting and right to submit claims against your estate. Understand that these laws also allow for you to form your own plan in advance through last wills and testaments. That is why we have probate courts. These courts review your plans and determine there validity. Probate is actually a word derived from ancient Latin meaning "to prove". The process is a publicly notified event to allow creditors and potentially any omitted beneficiaries to submit their claims against the estate.
Will substitution
There are ways to develop plans and dispose of assets that prevent the probate process. These plans are referred to as will substitution arrangements and are contractual. These contractual arrangements remain private and pass to the stated beneficiary because it is stated as a contract. Some examples of will substitution are beneficiary designations through insurance contracts or retirement plans, like IRAs and Pensions. Another form of will substitution is a trust, such as a living family trust or an irrevocable trust.
Conclusion
We are just touching the concept of estate planning with our discussion here. We believe this is a very intricate part of the financial planning process. Padgett Seep & Associates has developed relationships with estate planning specialists to help guide our clients through this complex and sometimes emotional process and develop plans that are specific to them.