The phrase “death is hardest on the living” refers to the emotional grief a person feels after losing a loved one. But in many cases, it can also represent the financial and legal complications that arise when a family member passes on without a will.
According to the Pew Research Center, only 32% of U.S. adults have created a will that describes what to do with their assets and belongings after they die. And only 31% have made a living will or advance healthcare directive.
To understand why doing so is important, we sat down with Bernard Johnsen, founder and managing attorney of Praesidium Law, a Chandler-based legal firm that specializes in probate and trust litigation, estate and trust administration, and estate planning, to share the basics of what you need to know to get started.
When should I start thinking about estate planning?
People will often ask me, “What age do I need to be or how much money should I have before I should make an estate plan?” I tell them that if you’re breathing, you should have an estate plan because proper planning actually serves you while alive—not just after your death. At a minimum, you should start with some basic powers of attorneys. You’ll need these documents in the event you don’t have the capacity to make decisions for yourself regarding your assets and your health care. Powers of attorneys are fairly inexpensive and can save you thousands in attorneys fees and costs by avoiding the need for a guardianship and conservatorship.
Why do I need a will or trust?
Most people want to avoid probate as it is a costly process with very rigid rules, and nearly everything filed with the court is part of the public record. You can avoid probate with a Last Will and beneficiary designations on your assets. However, creating a trust is the most common way to avoid probate, which comes with many other benefits such as promoting family harmony (no questions as to your wishes); privacy; protecting your children from creditors and predators; preserving inheritance from wasteful spending; and protecting your children in the event they have drug, alcohol, or gambling addictions. But, most importantly, if you do nothing, the state of Arizona decides who receives your assets. Sometimes it’s right, but sometimes it’s wrong. It’s hard enough to lose someone, but you don’t want your loved ones to be stuck cleaning up a mess at the same time.
What are the main things people need to keep in mind when it comes to estate planning?
Estate planning is more about being prepared for unforeseen circumstances than simply dividing assets at your death. It is kind of like insurance, where you are planning for unfortunate events that you hope never happen. The plan should work for tomorrow—not just in 20 years. Also, they should make sure they put responsible people in charge of managing their assets while they are alive and after their death. Most of the litigation calls we get are because the person who’s put in charge simply isn’t doing the work. You need someone who is very task-oriented and desires to get things done quickly. And, you should discuss your estate plan with your family. A huge reason why most families have disharmony is that they simply don’t talk about it. Death can be an uncomfortable topic, but you need to communicate with your kids and family members about who you’re choosing to manage your finances and make your healthcare decisions. This way, questions can be answered while you’re alive instead of questions and assumptions being made after your death. This open communication will defuse potential fights in the future.