The most popular estate planning option: doing nothing. The more technical term for this lack of planning is called “dying intestate.”
Dying Intestate: “Dying intestate” simply means that you have decided to depart this world without creating any estate planning whatsoever, not even a will. While your family will be horrified at this prospect, your unintended beneficiaries, the government and the probate court, will be delighted. Because by dying intestate, you have allowed the government to draft your estate plan for you. As a result, they can tax your estate and impose other costs at the maximum amount allowable by law. Also, your estate will go to people according to how state law decides, not what your personal wishes may have been. For example, most married couples want their share of the estate to be used by the surviving spouse before the children inherit. However, if you have a blended family situation and provided no direction ahead of time, when you die, the court will only give one-third of your estate to your surviving spouse and two-thirds to your children from a previous marriage. Regardless of your family’s particular circumstances.
This is the most popular estate planning option. Almost two-thirds of us will choose to do no estate planning before we die.
But this problem is exacerbated before you die if you have no incapacity planning documents in place. If you become mentally incapacitated and can no longer handle your own affairs, without the proper documentation drafted ahead of time, you will have to go through a legal proceeding where a court appoints a guardian to handle your personal affairs and a conservator to handle your finances. The procedure is oftentimes referred to as “living probate.”
And living probate can be a living nightmare for you and your family for several reasons. First, it’s a humiliating process. You are declared incompetent in a public proceeding. Next, the court is in charge. The court will decide which people will manage your affairs; it’s neither you nor your family’s choice. Most of the time, the court will chose a family member, but that’s not a guarantee and no guarantee they would chose the “right” family member.
Because of this court proceeding, there is lag time in the management of your affairs due to paperwork and delays. Of course, these hassles can add a lot of stress to what is already a very stressful situation for your family.
Finally, living probate can be very expensive. Typically, there are court fees, attorneys’ fees, expert witness fees and accounting fees. Additionally, once your conservator has been appointed by the court, this person has to give an annual accounting to the court on how your financial affairs have been managed. This is true even if the court appointed your spouse or one of your children as your conservator.
Doing nothing does not sound like an appealing prospect for your family. Remember, that is who you’re doing estate planning for. It’s not about you. When your estate plan is operational, you are either dead or mentally incapacitated and don’t know what’s going on. Proper estate planning is for your family’s peace of mind.