If the thought of making a plan for your money in the immediate term seems daunting, estate planning might be way down on your list of priorities. But experts say that procrastinating could cost you and your loved ones down the line.
There’s no way to anticipate when we’ll go, but that difficult time can be made easier on our friends and family by having a plan in place that tells them exactly how to manage any money or assets we’ve left behind.
Think of an estate plan as your final instructions for how to manage important decisions about your finances, health, and more.
“Estate planning is a collection of legal documents that details your final wishes about your assets, health care decisions, and finances—where you create an estate plan and keep it up to date,” says Jenny Xia Spradling, co-CEO of FreeWill, an online platform that offers free estate planning tools. “It governs the assets you own, your future care, and the legacy you leave for people and for causes you care about. It’s important because it simplifies the probate process, which can be lengthy and costly for your loved ones; it can help you set aside funds and guardians for minors and for pets; it helps avoid conflict between your loved ones over your assets; and it helps you leave an impact via charity.”
A common misconception is that estate plans are for the ultrawealthy, but this is simply not true. Your loved ones will need to know what to do with any assets or money you leave behind, no matter the size or value.
It’s projected that more than $80 trillion will be passed down from today’s older generations to their children and other heirs over the next two decades, but most Americans don’t have a clear plan in place for their assets.
A 2022 survey by Caring.com found that only 33% of Americans have a living will or trust, and one in three Americans who have no will or living trust claims they don’t have enough assets to leave behind. And the outlook is even worse for people of color.
According to a 2022 Consumer Reports survey, 61% of white Americans and 67% of English-speaking Asians don’t have a will. When looking at other groups, the survey found that 77% of Black people and 82% of Hispanic people don’t have a will.
“If you don’t plan ahead, you run the risk of either dying without a will or estate plan in place—or you might be scrambling to do so after you’re in physical and/or mental decline and might prefer spending quality time with the people you love. This all runs the risk of it being unclear while you’re alive who makes health care and financial decisions on your behalf if you become incapacitated, what your wishes are for your body after you pass away, and who receives your assets,” says Xia Spradling. “When there’s familial disagreement over who receives certain assets, that can lead to discord over your estate that can turn ugly and costly, and is probably not what you ever intended.”
As you’re working on creating your estate plan, you’ll want to keep the following in mind to ensure that the process is smooth and seamless.
For some, making an estate plan can feel complex and emotionally heavy, but taking the time to set clear instructions now can make it easier on your loved ones later. It also protects your legacy and ensures a smooth transfer of wealth from one generation to the next.
The information contained on this website is presented for informational and marketing purposes only and is not to be understood as legal advice. You should consult an attorney for advice respecting your individual needs. Renee E. Nesbit, Attorney at Law looks forward to speaking with you about your particular needs. Please note, however, that the mere act of contacting our firm does not create an attorney-client relationship. As a result, you should never send any confidential information to our office until a Representation Agreement has been signed by both you and Renee E. Nesbit, Attorney at Law.