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Why Do I Need an Estate Plan?

Jan 12, 2024 - Blog by

January 15, 2024 – Ryan D. Farley

Why do I need an estate plan? The simple answer is control. There are others, summarized below, but ultimately, the reason you need an estate plan is to be able to make the decisions about who will receive your property and how they will receive it at your death. A well-crafted estate plan does this for you. 

Did you know that there is a default set of rules that govern the details of the distribution and administration of your assets if you haven’t formally put a plan in place? These default distribution provisions, known as intestacy, are set out in Kansas law and often do not carry out your desired plan.

For example, if you are married and have children, any assets titled in your individual name will be distributed one-half to your surviving spouse and one-half equally to your kids. This distribution doesn’t consider whether the surviving spouse needs the assets or whether the kids are minors. Additionally, the default rules don’t consider whether a beneficiary is good with money, is a spendthrift, or is in the middle of a divorce. The default distribution rules also don’t consider your charitable intent. If the asset is in your individual name at death, the default distribution rules dictate the distribution. 

A common reason many adults begin thinking about preparing an estate plan is to nominate who will take care of their kids if something were to happen to them before their children reach age 18. Yet, very little thought is given by these same conscientious parents as to how a young adult might receive his or her inheritance when they reach age 18. Is 18 appropriate, or is an older age better suited for their child? There are various ways to leave assets to your intended beneficiaries in a way that will help them without giving them control of the assets. However, these alternatives require active planning.

For example, assets can be distributed outright to your intended beneficiaries all at once, over time, such as annual increments for 5-10 years, or held until the beneficiary reaches a specific age. But assets can also be left in trust for your intended beneficiaries. When appropriate, the beneficiary can become the trustee for his or her inherited trust. This allows the beneficiary to control the investment and distribution of inherited trust assets while protecting those assets from the beneficiary’s creditors, such as a divorcing spouse, lawsuits, and bankruptcies.

Proactive planning also facilitates the efficient administration of your affairs after your death. There are certain tasks that have to be completed when a person dies. Debts must be paid, a final income tax return must be filed, funeral expenses must be paid, etc. By putting together an estate plan, you can avoid the additional expense of probating your estate. Probate is the process by which the court supervises the identification of your assets, creditors, and beneficiaries, then approves and directs the payment of your debts, and finally directs the distribution of your assets. While probate can be a useful tool in some cases, in most cases, it is an added step that takes additional time and money to complete. By completing an estate plan you can avoid this additional step and expense.

Why do you need an estate plan? Control. The defaults that are provided by state law or by the contracts related to assets are unlikely to fulfill your intent. By choosing to plan, you can take control of the process to ensure that your intent is carried out.

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