The "No-Plan" Plan
Most people know that Estate Planning is helpful. Few know why. In this post I will illustrate what happens to your assets and your children when you do not have an Estate Plan in place.
1. Your kids. This is the biggy, right? This is the number one concern I have heard couples name as the reason to seek out Estate Planning. The scenario often goes that the two of them were on a flight together, their baby with grandma, and they suddenly realized they had no idea what would happen to their child if they didn't make it home from their vacation. So what would happen? Your family and friends who were interested in taking in your children would petition the court. To petition the court takes time and money. After investigation and review, a Judge would choose the Guardians.
But what if you told your sister it would be her? She would still have to petition the court and if any one else is petitioning for guardianship too, the Judge would review all options and choose.
But what if you write it down on a piece of paper and keep it in your nightstand? Same scenario as above. There are several steps that need to be taken for a Will to be legal in Illinois, and handwriting something out is automatically invalid.
And worst case scenario, your family is fighting like crazy, no one can agree and everyone is petitioning the court, and Child Protective Services steps in to take custody of your kids until everything is resolved.
2. Your Assets. A lot of people make the statement, "We don't have a lot of assets". But if you have over $100,000 in assets or own real estate, then your assets will go through probate.
So what are your assets? Your house, bank accounts, life insurance, retirement accounts, cars, and tangible property like wedding rings, baseball cards, etc. In Illinois, your assets will distribute per stirpes, which means: If you have a spouse but no kids, your spouse will get all of your assets. If you have a spouse and kids, your spouse will get half of your assets are the other half will be divided equally among your biological and adopted children. If you have no spouse and no kids, your assets will be divided among your parents and siblings (including half-siblings). To deviate from this flow requires an Estate Plan, however Estate Plans usually follow per stirpes as well.
What is probate? Probate is the court process that must be opened when someone dies, and only Estate Planning or assets totaling under $100,000 can get you out of probate. Probate takes at least 6 months to a 1 year in Illinois. That means your family, even those who will get Guardianship of your kids, will be waiting to get access to your assets. Probate is also a public process that allows creditors to come in and take first dibs. Probate means more time, more money, and more mess for a family who is grieving the loss of a loved one.
But in order for your assets to be distributed, they need to be found. Does your family know where you bank? What type of policies you have and who they are with? Illinois currently has billions of dollars in unclaimed assets. Did you know the state could end up with some of your hard-earned money?
3. Health Care Directives. Do you have strong opinions on what should happen to you if you are incapacitated? Do you want to stay on life-support? For how long? What if you are pregnant while on life-support? Do you want to be buried or cremated? Do you want anything special done with your remains or at your wake? How about organ donation? These are just some the questions that your family will need to answer if you don't. And when a family is in a stressful time, decisions like these can be very hard to make.
Creating an Estate Plan will not only make you feel like you are in control, it will make it so much easier for your family to manage your affairs. Do it for yourself so you can relax knowing you took care of everything, for your children so you know they are protected, and for your family so there is no confusion and everyone can start healing sooner.