Estate Planning-Who Do You Want to Have Control?

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Estate Planning-Who Do You Want to Have Control?

When Pablo Picasso died in 1973, he left behind a massive fortune, five houses, numerous pieces of artwork–and no will. After a six year struggle, his family finally agreed to evenly divide up his estate, at a cost of $30 million dollars.


Tom Carvell, who built himself a fortune selling soft serve ice cream, died in 1990, with an estimated fortune of $80 million dollars. His estate went to probate, where years of legal battles ensued. Today, the estate has still not been resolved, his surviving wife got a negligible part of the estate, and legal fees have cost the family an estimated $22 million dollars.


Even some of the most sophisticated, savviest people in the world can make the mistake of failing to plan. Estate planning can be a sensitive topic, with complicated rules. But it is important to plan. Probate isn’t just a costly nightmare for celebrities, it is a problem for everyday families who spend years battling over a deceased loved one’s estate. You need to spend some time to think about how you want your estate to be carried out. Who do you want to make decisions for you if you are ever unable? Do you want decisions made on your own terms? Or will you leave your well being and hard earned assets to the mercy of state jurisdiction?


The Minimum: A Will


A will is a legal document which designates how your estate will be divided among your heirs. Yet 58% of the general population admits they have no will. With this simple document, at the end of the contestable period in probate, if no one contests your will, your wishes will be carried out.


If you were to die without a will in place, your estate will be divided according to state and local laws, which will likely not divide it as you want. For example, only 16 states have provisions where if you die intestate (without a will), your estate gets passed on in entirety to your spouse. Some states even have laws that say the estate is divided evenly among the children and the spouse, so a surviving spouse with three kids would only get one fourth of the estate.


Entrusting Trusts


Trusts are legal documents that give you control of your assets beyond the grave. They are not only for those with high net worth. Anyone with an important asset should consider having a trust to protect it.


First off, trusts are private documents. Wills are public. Trusts give an easy way to transfer assets to heirs quickly and privately.


Secondly, trusts can allow you to name explicit conditions under which your assets will be distributed, which your trustee will carry out. You can designate an age at which a child can inherit your assets. You can specify that the asset be used for something specific, such as for education or a wedding. You can state a loved one cannot inherit anything until they pass a drug test. You can add provisions to limit retirement account withdrawals. Anything you wish to specify, will be carried out by your trustee.


More to Consider: Durable Power of Attorney


If you were to become disabled for any reason, someone needs to be able to manage your finances and make legal decisions. Without this, the court will have to appoint someone to do this for you, which may lead to disputes among loved ones as to who is best suited to make decisions and how property should be handled.


It is extremely important to carefully think about, and designate a durable power of attorney. This person will be given authority to handle your finances and property, and will be held to a fiduciary standard, meaning they will have to act in your best interest.


Health Care Proxy


You need to name someone to carry out your wishes. Your health care proxy will to the best of their ability, make medical decisions for you in the way you would have wanted. Without an appointed proxy, your family will have to ask the court to appoint someone to make decisions for you. This process can be long and stressful for your loved ones, and they may have differing opinions of what they believe you would want.


Have you thought about what you would want for yourself if you ever had a stroke? Would you want to go to a nursing home? What if ever needed life support? Went into a coma? These are all possibilities, which are emotionally straining on your loved ones just as much as it is physically for you. You should be clear about your wishes, and appoint someone you trust to carry them out.


Who Do YOU Want to A Have Control?


Ultimately, estate planning is simply a question of control. Who do you want to have the control–you or the state? Who do you want to make decisions for you? Who do you want to look out for your well being?  Who do you want to divide your assets? If you don’t decide to take control, the state will.


Who do you want to decide how your legacy gets passed on?


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