In the last two issues of the Virginia Woman Magazine, I reviewed the Estate Planning Process and provided a summary of the legal documents included in a foundational estate plan and list of action items to be completed as part of the planning process. It isn’t just about having a Will.
Many people believe they don’t need a Will because they are single, they don’t have a large estate or “my spouse will inherit everything anyway.” Not taking the time to work through the estate planning process and execute the necessary documents typically leads to more complexity and expense for you and your loved ones and unintended consequences. So, why should you have an Estate Plan (The following is based on Virginia Law):
YOU designate an agent(s) of your choosing to make your personal, medical and/or financial decisions in the event you are not able to do yourself and you control which decisions they are permitted to make. For example, do you want your agent to be able to change the beneficiary on your retirement account or life insurance, make gifts of your assets or terminate life support if you have a terminal condition?
Without the necessary legal documents in place, if you become incapacitated, your family will need to seek the appointment of a Guardian to manage your personal and medical affairs and a Conservator to manage your estate and financial affairs. This requires that a Court declare that you are legally incapacitated. This process is a matter of public record and may result in your losing valuable legal rights. It also results in increased costs associated with the court proceedings and ongoing supervision of your agents.
Virginia law does provide some assistance in the area of medical decisions. If you are unable to make medical decisions, state statutes provide a list of individuals that can make some of these decisions for you without a declaration of incapacity. However, these individuals may not be the individuals you would have chosen and the individuals you would want making your decisions may not even be consulted.
YOU have the ability to make may key decisions, including:
• Who will inherit your assets and the terms and timing of the inheritance,
• Who will be responsible for raising your minor children and managing their financial needs,
• Who will be responsible for managing your estate,
• The extent to which your estate is subject to the probate process, and
• How to implement strategies that can minimize taxes, provide creditor protection and financial management.
Without a plan in place, state and contract law and the courts will make these important decisions for you. Some assets may pass to a joint owner or named beneficiary. The rest will pass under state law. This can result in people inheriting the wrong amounts, inheriting at the wrong time or even the wrong people inheriting your assets. If you have minor children, it could give rise to court appointed Guardians for the child and Guardians for the child’s estate. It often increases the costs of estate administration and creates delays in the timing when your heirs will have access to their inheritance.
Estate plans should be designed to address your situation. They do not need to be complex and expensive if you have a simple situation. If you would like to learn more about your estate planning options, schedule a complimentary consultation.
Dawn M. Dale, JD, LL.M., CFP®
McLean, Virginia 22102