You made it to the end! This last article is just meant to wrap and summarize the previous articles in this series on whether you need an estate plan. So, do you? It’s almost always better to have one than not, but the real question is whether it is worth the money to work with a lawyer to draw one up. For a simple estate plan, I charge $1,500 for an individual and $2,000 for a couple. That’s a lot of money, so let’s summarize the reasons why it may make sense to spend it.
What does an estate plan include?
Quickly, here is a recap of the documents included in a standard estate plan:
- Power of attorney
- Advance Health Care Directive
What does each document do?
Will - The will is the document people are most familiar with, and it does basically what you expect – it sets forth your wishes for the distribution of the assets you own personally at the time of your passing. This typically does not include any asset which has a beneficiary designation, or any asset which is jointly owned. It also names a number of people in important roles, like executor (the person that administers your estate and carries out the wishes you set forth in the will – if there are enough assets in the estate to do so), and a guardian of minor children (very important for parents or for those who anticipate having children in the future).
Power of Attorney - The power of attorney names someone to carry out your affairs should you become incapacitated. Without this, a loved one would have to petition the court for guardianship, which can be an expensive and time-consuming process.
Medical Power of Attorney & Living Will - The medical power of attorney and living will names someone to make healthcare decisions on your behalf in case you become incapacitated, and in accordance with your wishes as set forth in the living will portion of the document. There, you specify what (if any) life-prolonging measures you would want if you are in a permanent vegetative state with no significant chance of recovery.
What if you don’t have one?
What happens if you die without a will? This is technically inaccurate, but the most straightforward way I’ve heard this question answered is to say that, when you die without a will, Pennsylvania law writes your will for you. PA law dictates who should get your assets in probate court, and the recipients of those assets are called your heirs. Who those people are depend on who survives you. If you leave a surviving spouse and parents, for example, your surviving spouse gets a portion of your estate and your parents get a portion. The process of administering the estate of a person who died without a will is called “intestacy.”
Several factors make intestacy more difficult:
- All your heirs must sign “renunciations” agreeing to the proposed administrator of your estate
- No direction is given for the disposition of your remains
- No election is made naming guardians of minor children
- Your assets may go to unintended beneficiaries
On that last point, I have heard it argued that state law often mirrors what the deceased person wanted, but I do not agree. Under PA law, a surviving spouse does not receive the entire estate of a deceased spouse, which is by far the most common preference of married individuals. Instead, if the deceased person is survived by children or parents, they get a large share of the estate.
What happens if you are incapacitated without a power of attorney in place?
We touched on this above, but to reiterate – it can be very difficult for a loved one to be recognized with the authority to manage your legal affairs without a power of attorney in place naming them as an agent. Banks often resist recognizing such authority (but they always will) even where there is a power of attorney in place. This isn’t their fault; they are attempting to combat increasing accounts of fraud. However, the absence of a power of attorney makes managing an incapacitated person’s everyday affairs nearly impossible. The loved one would have to petition the court for formal guardianship, which is a costly and time-consuming process -- orders of magnitude more difficult than having a power of attorney drafted.
What happens if you are incapacitated without a medical power of attorney and living will in place?
Mostly this document is designed to ease the burden on your loved ones, if you are seriously sick or injured, by clearly communicating your wishes as at a time when you cannot communicate them yourself. Without it, decision-making is usually left to your next of kin who may be left to guess about what life-prolonging measures you want, if any. It also can cause that person to feel guilt or distress over the decision at what is already a difficult time.
So, do you need an estate plan?
Back to our original question. Certainly, the world won’t end without one, and property does not go to the state if you die without a will (despite popular belief, unless you die without any heirs at all, which is uncommon). However, for the reasons set forth above, the benefits typically outweigh the cost.
Please feel free to get in touch to set up a free consultation, either in person or over the phone, if you have any questions or would like to get the process started. Thanks for reading!