Creating an estate plan is important for everyone to do. An estate plan gives you control over your legacy and allows you to determine what happens to the money and property that you worked hard to acquire during the course of your lifetime. However, there are some circumstances where it becomes even more important to take control and express your preferences for what happens if you become incapacitated or pass away.
Here are three examples where the consequences of not making an estate plan in advance could be especially dire:
1. After a divorce.
One of the most critical times to make an estate plan is after a divorce. Sadly, divorces are very common. In fact, according to Forbes Advisor , there were 673,989 divorces and annulments that occurred over the course of 2022. Those divorces happened in the 45 U.S. states that report on this statistic.
If you are divorced, you need to put an estate plan in place because:
- You no longer have a spouse as an obvious beneficiary or as an obvious person to make decisions on your behalf if you cannot.
- Your child’s other parent may not necessarily be the appropriate guardian for your children if you pass away.
- You no longer have a spouse who would be the default caregiver for your pets if you become incapacitated or if you pass away.
- You may not have someone who knows all of the details of your financial accounts or assets.
- You may not want your ex in control of any property or money left to your minor children.
When there is no default person to manage your affairs, make decisions on your behalf, or inherit shared assets, it is up to you to decide who is going to do all of those things. You need to think carefully about who you want to fill these roles and you need to express your preferences so there is no confusion when you pass away.
2. When you have a substantial amount of assets.
If you have a substantial amount of assets, it also becomes very important to make an estate plan. This is not just because you have more assets to distribute among your loved ones either. It is important to make sure you have an estate plan when you have a lot of assets because:
- Your executor must have the skills to manage your assets after your death before the property is transferred to new owners.
- The right person must be in charge of managing your assets if you become incapacitated.
- You may want to keep things more private, so you may want your money and property to transfer via trust administration rather than via probate.
- You may want to take steps to avoid estate taxes at the state and/or federal level.
- You may need to take extra steps to ensure that your assets are managed wisely by heirs.
- You may want to protect your wealth from creditors or other claims.
- You may want to ensure you do not lose what you worked for if you move into a nursing home.
The more wealth you have, the more important it is to protect it by using the right estate planning tools.
3. If you are a single parent.
Finally, if you are a single parent it is very important that you make a comprehensive estate plan. There are a few key reasons for that:
- You need to name an appropriate guardian for your minor children.
- You may want to protect your children from inheriting a large sum of money directly at a young age.
- You may not want your children to make life and death medical decisions for you.
There are tools to ensure that the money you leave your kids is managed wisely or used for specific things like a college education. You can also create advanced directives or use a healthcare power of attorney to express your wishes on medical care. These documents also name an appropriate person to make medical decisions on your behalf if you cannot do so.
These are three of many examples of situations where estate planning is of the utmost importance. There may be many other circumstances where your unique needs make estate planning especially important. Talk with an experienced estate planning lawyer to ensure you have the best plan for you.
When you work with a Houston estate planning attorney at The Mendel Law Firm, L.P., you will get the personalized support to make an estate plan that is right for you. To find out more, give us a call today at 281-759-3213 or contact us online to speak with a member of our legal team.
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