“It pays to plan ahead. It wasn’t raining when Noah built the ark.” ~ Unknown
The greatest mistake when it comes to putting the proper documents in place to pass your property and assets, is the failure to plan. Nearly 70% of all adults in the United States do not have a Will or Trust. Sometimes failing to plan is due to a feeling you are too young, a feeling of immortality or the fear of death. It is alarming to see how many obituaries there are for people in their 30’s, 40’s and 50’s. In other instances people look at the planning process as overwhelming. Still in other cases, people unable to decide who should administer their assets after their death. The problem is that without a plan in place, your loved ones are left in the dark.
"Nearly 70% of all adults in the United States do not have a Will or Trust."
In our experience, even in families that are extremely close, a death can negatively change the relationship between family members. Unspoken conflict between each other begins to boil to the surface. Memories of what “mom and dad wanted each to have” differ between each child resulting in resentment and long lasting hostility between family members.
Furthermore, failing to plan results in the State of Minnesota and not you determining how your assets and property will be distributed. Minnesota will also determine who will act as the individual responsible to oversee the distribution or your assets.
If you do not have a plan in place "the State of Minnesota and not you" will determine how your assets and property will be distributed.
If you do not have a plan in place "the State of Minnesota and not you" will determine how your assets and property will be distributed.
Jack & Jill's Example:
Why is this a problem?
Let’s assume for a moment the following facts about Jack and Jill:
Jack and Jill are married.
Only Jill’s name is on the deed to Jack and Jill’s homestead property.
Jack and Jill have 3 children.
Jack and Jill do not have a Will.
Jill dies.
The Result?
What do you think happens to Jack and Jill’s homestead property?
Jack only receives a life estate in property and Jack and Jill’s three children receive the remainder interest. This means that Jack can use the property for his life. When Jack dies Jack and Jill’s children receive the property.
"Jack only receives a life estate in the property."
On the surface, this may seem to be a reasonable result. However, consider that during Jack’s lifetime, he is unable to sell the property without his children’s consent and he is only entitled to a portion of the proceeds from the sale of the property. If Jack and Jill’s children are minors a conservatorship would need to be established for each minor child to sell the property.
This becomes even a greater more complicated problem if the children are Jill’s children but not Jacks. In such a case, the chances of obtaining Jill’s children’s consent to any sale of the property is significantly lessened.
Jack "is unable to sell the property without his childern's consent."
In the end, failing to plan can result in your family spending thousands of dollars to resolve issues and disputes that may arise upon your death for expenses that are completely avoidable.
The Solution?
You probably guessed it. Move forward with a plan. It is important to begin the planning process as soon as possible while you still have your wits about you. Even if you have not made all your final decisions as to your distributions or who is to be charged with administration and distribution of your assets after your death, going through the planning process allows you to sort out those issues. You can always modify your Last Will & Testament or Trust if you later change your mind. Working with the right team will be able to answer the questions you have and assist you to proceed through the process effortlessly.
"You can always modify your [plan] if you later change your mind."
More importantly, with planning and clear instructions, quarrels and dissent between children can be minimized and completely avoided. Planning can avoid the waste of thousands of dollars from your inheritance by unambiguously stating your intentions to distribute your property and assets.
An article on Fox Business identifies ten specific benefits to putting a plan in place. These benefits to preparing a plan include:
Reducing or eliminating potential estate tax.
Making effective transfers during your life and after your death.
Arranging for efficient business succession.
Arranging for health care decisions in the event you become incapacitated.
Avoiding the cost and delay of probate.
Enabling property to pass to the desired person.
Planning for the care of and financial wellbeing of your children in the event of your death.
Fulfilling your charitable intentions.
Enabling peace of mind.
Giving the gift of clear instructions for your wealth and wishes to your loved ones.
No matter the size of your estate or the amount of your assets, everyone can benefit from getting a plan put in place. A good plan will not only address the distribution of your property and assets upon your death, but also will put in place trusted people to act on your behalf while you are alive to make financial and healthcare decisions if you should not be able to yourself.
We all know that good decisions are ones that are well thought out, so make them at a time when you can reason the results and come up with tailored solutions to your situation! And start now; when you reach the age of majority, you have the legal right, and maybe obligation, to make your testamentary or life event decisions known to those that would be impacted by them.