Natalia Vander Laan
Estate planning is often an overlooked aspect of personal finance, even though it is crucial in ensuring the organized and desired transfer of assets. Failing to create an estate plan can have far-reaching consequences that affect not only the financial legacy but also family relationships as failing to create an estate plan can lead to confusion, disagreements, and financial hardships.
If a person dies without an estate plan, thus intestate, the state’s laws will determine how their assets are distributed. These laws may not align with the decedent’s wishes, leading to unintended consequences, disappointments, and family conflicts. The assets may be divided among family members, including estranged relatives, in a way that may not reflect one’s true intentions. Furthermore, without specific directions, treasured or valuable personal items may be distributed to the unintended individuals.
One of the most common consequences of not having an estate plan is the potential for family disagreements and legal conflicts. Without clear instructions on how one’s assets should be distributed, relatives may disagree on the division of property, leading to expensive, lengthy, and emotionally exhausting court proceedings.
Another serious consequence involves one’s children. If a person has minor children but no estate plan, not only the court will decide who becomes the children’s physical guardian but also the guardian of their estate. This decision may not reflect the parents’ preferences, potentially leaving the children in the care of a person who would not be otherwise chosen.
Lack of estate plan can also likely result in a need for probate. The probate process is typically time-consuming and expensive. It can take months or even years to complete. During this time, the loved ones may face financial difficulties as the delay can impact the timely distribution of assets they may need.
Effective estate planning can also help minimize the tax burden on the estate, allowing more of the assets to be distributed to the intended beneficiaries instead. Without an estate plan, the estate may incur unnecessary taxes, reducing the value of the inheritance.
Estate planning is not only about the distribution of assets, but it also involves planning for one’s healthcare and end-of-life decisions. Lack of a health power of attorney and a living will prevents one’s family from making medical decisions on behalf of the incapacitated loved one. If there is no clear authorization and directive, a court order may be needed instead, again resulting in a lengthier and more expensive proceeding.
Also, family businesses can be especially vulnerable without proper estate planning. The lack of a succession plan can jeopardize the continuity of the business and create tension among family members who may have different ideas about its management.
The consequences of not having an estate plan can be significant, affecting one’s loved ones, assets, and legacy. Accordingly, it is essential to create a comprehensive estate plan that reflects one’s wishes and protects their family’s well-being. Taking the time to develop an estate plan is not only a prudent financial decision but also one that ensures a person’s loved ones are well taken care of and protected.
Natalia Vander Laan is a Minden attorney.
