Did you know that a significant number of adults in the U.S. – around 77% – haven’t documented their end-of-life plans? Even if you fall into this category, it’s important to understand that you still have an estate plan. You may not have created one yourself, but the State of Michigan has a plan in place for you called Probate. Although Probate may be suitable for a few individuals, most people consider it to be a suboptimal choice. The probate process can incur expenses ranging from 3% to 8% of your estate’s total value. This money could have gone to your loved ones, but instead, it is spent on attorneys, accountants, courts, real estate agents, and other professionals to administer your estate. If you don’t have an estate plan, your estate will have to go through probate. This can be a costly and public process. All the legal documents and requests become available to the public, and a Notice to Creditors is posted online or in a newspaper. This means that anyone can see what’s in your estate.
Having an estate plan is important not just for financial reasons, but also for preparing yourself, your loved ones, and the medical community for any possible health complications in the future. That’s why it’s crucial to include a Patient Advocate Designation and a Durable Financial Power of Attorney in your estate plan. These designations outline your preferences for medical care and prevention, the type of medical care you do not want to receive, and for your financial well-being to be taken care of. By doing this, you can spare your loved ones the difficult task of guessing what you would have wanted, which can help avoid family disputes. Additionally, by using the right tools, you can choose who will make medical decisions for you if you become incapacitated. Otherwise, doctors won’t know who has the authority to decide on healthcare matters, which could lead to a costly and time-consuming court battle.
Another non-financial reason is for the well-being of your minor children. Your estate plan allows you to designate a guardian for your children in case you are no longer around. Neglecting to plan ahead can result in your children becoming wards of the State, and the State may choose to place them with someone you would not have chosen. It’s important to plan for your children’s future and ensure their safety and security – just as it’s important to plan for your own future.
It is important to have an estate plan in place, even if you do not have a large estate. There are many non-financial reasons to consider creating an estate plan and we only discussed a small number of them. Planning ahead can provide peace of mind, knowing that your loved ones and legacy will be taken care of even after you pass away.
Jesse Bergwerff