By Nina Dow
Contributing Writer
REGION – Creating an estate plan, like securing a life insurance policy, can be a daunting task at any stage in life. Whether you’re establishing a career, raising a family, or accumulating assets, you should seek assistance from a lawyer specializing in this area of the law.
Ensure your wishes are honored
The most basic estate planning document is a will, which ensures your post-mortem wishes are honored. Without a will, state laws decide what happens to your property and who will serve as executor of your estate (an executor is responsible for carrying out your wishes as drafted in the will), which can lead to unintended outcomes and unnecessary conflict.
Despite its importance, less than half of adults in the U.S. have an estate plan that describes how their money and estate should be handled after their death, a trend that’s been consistent since 1990. The longer you wait to set up a plan, the more potential obstacles you and your heirs could face because of complex assets and complicated family dynamics that come with age. Overcoming these estate planning hurdles as you age requires careful planning and, oftentimes, professional guidance.
Common obstacles
As an estate planning and probate lawyer, I see several common obstacles that people aged 50 and older face when creating an estate plan. The good news is that each obstacle has a simple solution to get you on the right path.
First, and most common, you should be aware that estate planning is not all about planning for your death – estate planning includes setting up documents that are used during your lifetime (such as a power of attorney and health care proxy). Lifetime documents protect you and your family from probate court interference in the event you become incapacitated.
Second is procrastination. Many people wait to create at least a will because of discomfort with the topic of death and a misconception that they’re “too young” or “don’t have enough assets” to need one. The reality is that it’s never too early to start the estate planning process, and the older you get, the more important this becomes. To get the ball rolling, my clients start by listing all their assets with estimated values and clarity on how each asset is titled (for example, jointly or individually).
You must be able to identify your assets because, oftentimes, people own more than they realize and the importance of who gets what becomes more pressing. Furthermore, some states like Massachusetts impose a death tax for estates valued over a certain amount, and an estate plan that takes care of your beneficiaries can also minimize those taxes.
Remember that you don’t need a finalized estate plan right away – you can always make updates or changes as your life evolves since the documents do not take effect until your death.
Another obstacle people aged 50 and older may face is navigating emotions and relationships as they consider the distribution of complex assets. By this age, it’s likely people have accumulated more assets, such as homes, cars, and investments. There are specific ways each asset is handled in the estate planning process. For example, certain life insurance policies and retirement accounts can have beneficiary designations, which means they are passed directly to the beneficiaries and don’t need to be designated in your estate plan.
In many cases, having an advanced estate planning document called a “trust” can avoid “probate,” which is a lengthy and costly probate court procedure needed to transfer title from the deceased’s estate to the living beneficiaries. Understanding details like these makes it important to consult a professional to ensure your estate planning documents are legally sound and reflect your wishes.
If you set up an estate plan years ago, you must review it today. As your life evolves, such as through marriage, divorce, births, the death of a family member, or financial changes, it’s important to make sure your current estate plan still works as you intend.
Lastly, family dynamics are a common obstacle in the estate planning process. Blended families or strained relationships with relatives can make the asset distribution process challenging and cause people to delay setting up an estate plan to avoid conflict. This is where clear communication, when possible, comes into play. Having an honest conversation with your lawyer and family members about your intentions can avoid future disputes.
Estate planning doesn’t need to be daunting, especially if you seek proper counsel to assist you with spotting potential issues and putting in place documents that trouble shoot. By doing this, not only are you helping your beneficiaries, but you will also get peace of mind.
Attorney Nina T. Dow is a partner with Bowditch’s Estate, Financial & Tax Planning practice.
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