Everyone needs an estate plan, whether they realize it or not. Not only does it clarify a person's wishes, but it reduces the cost and time of administering the estate. In most states, probating a will is a quick and easy process, compared to handling an intestacy or heirship.

What is Included in an Estate Plan?

Every adult needs the following:

a. Durable power of attorney to name another person to act on your behalf (upon disability).

b. Medical/health care power of attorney to handle health care decisions if disabled or unable to act.

c. Anyone who knows passwords to pay bills and gain access to social media accounts should the need arise. This security could also protect one's online information. These accounts will need to be deactivated at some point, and someone knowing accounts and passwords could make this process smoother.

d. A letter of instruction to be used in addition to a will in certain circumstances that lists how one wants their assets (especially those with little financial value but great sentimental value) distributed at death. It can also contain funeral preferences.

In addition to these items, there are various stages of life that need an estate plan. We would like to note that this is not a comprehensive list and is not intended to exclude anyone but rather to emphasize the need for an estate plan for everyone.

Who Needs An Estate Plan?

Single People and/or Couples with No Children

Believe it or not, young singles without children need an estate plan. As long as there is a possibility of an accidental death, an estate plan, which is different from a will, is a good idea. At a minimum, a young single person needs a power of attorney for financial and medical decisions in case of an accident or incapacity. They also need someone who can sign their bank account and access passwords after their death. And finally, they may want a will to specify who will care for a pet or another special asset.

Married Couples with No Children

It's not often that young married couples with two sources of income see a need for an estate plan. However, married couples may need life insurance to replace one of the income streams. If you and your spouse have retirement plans, beneficiary designations should be reviewed regularly as life events happen. A will for each is also important to help ensure assets are distributed as intended. Where appropriate, some accounts could be held jointly, so the surviving spouse can have immediate access to the joint accounts.

Married Couples with Minor Children

When children are involved, there is a heightened need for a will to name guardians for the minor children. In addition, if college is planned for the minor children, a plan to pay for college, and all that is included with that, should be a part of the estate plan. There may also be a need for trusts like a Qualified Terminable Interest Property Trust (QTIP), to ensure assets are distributed to the children as intended by the parent. This need may arise if a surviving spouse remarries, for example; a trust could ensure assets go to the decedent's children as intended instead of to the surviving spouse and their new spouse and/or children. If there are special needs children or family members, there are tools that may be needed for long-term care that may not be needed for other children or family members.

Divorced Couples with No Children

A review of life insurance and retirement plan beneficiaries is a must in divorce situations. There may also be joint accounts set up that need to be changed or closed, with separate accounts set up.

Divorced Couples with Children

When children are involved, there may be a need for trusts (or other tools) to ensure assets are distributed as intended. There should also be a review of life insurance and retirement plan beneficiaries.

Unmarried Partners

Wills are extremely important for unmarried partners if the intent is to leave assets to the partner. If there is no will, probate will follow the rules in the state of residency, which may not provide for an unmarried partner.

Business Owners

Business owners have unique items needed in an estate plan, especially if other family members are involved. These are discussed in section 100 in the Tax Planning and Advisory Estate and Gift Planning for Business Owners topic.

Aging Individuals

Even before individuals fall into this category, planning is needed for long-term care, elder care, Medicaid eligibility, and retirement. Life insurance, if desired, may be more affordable when purchased at a younger age and may meet the needs of aging individuals.

Let Michael D. Peroo Help You with Your Estate Plans

At MDP, we'll work with you to create a plan that is right for you and your family, if necessary. Don't put off your estate planning until the day after tomorrow; contact MDP today to get started on planning for the unexpected!