"Do I need a Will?", or more appropriately, "Should I have an Estate Plan?"
Everyone over the age of eighteen (18) should have an estate plan. This does not mean that your estate plan has to be complicated or expensive. Having an estate plan merely means that you have a plan in place to care for yourself, those that are dependent upon you, and the assets that you have accumulated so far in your life. Most people think that they only need to prepare an estate plan if they have accumulated a lot of assets. In fact, having an estate plan to take care of your assets after you die is probably the least important reason to prepare an estate plan. The most important reason for having an estate plan is to take care of those who are dependent upon you if you should become incompetent. Likewise, if you should become disabled or incompetent, having an estate plan allows you to decide who is going to assist you and help to take care of you.
Having an estate plan is more than having a Last Will & Testament. It means having a plan in place to deal with each of the following questions or concerns:
Who gets my assets upon my death; meaning, who are my beneficiaries?
Who will take control of my assets upon my death to pay my bills and distribute whatever is left to my beneficiaries?
Do I want that person to be able to just take care of things, or do I want some type of supervision over their actions?
Who will take care of my children before they grow up? Who will raise them? Can my children stay in my house, and go to the same school if I am not here to raise them?
Who takes care of me if I become disabled or incapacitated?
Who takes care of my children, my husband or wife, my parents, or anyone else that I may be taking care of or is dependent upon me?
Do I have the legal documents in place that will provide the answers to each of those questions?
Statistically, it has been estimated that only about thirty percent (30%) of people have planned for their deaths by creating a Will. An even smaller percentage have planned for their own disability or incompetency by having a Financial Power of Attorney or a Health Care Power of Attorney. The tendency is that for most younger people, they think that they are not going to be disabled or die anytime soon. Young people tend to think that having a Will is only for old people. Many older people do not like to think about making a Will, because they feel that it is one of the first steps toward their death bed. The problem with this thinking is that we are all going to die at some time. It is one of the only two things that are certain in our lives: death and taxes. Failing to have a Will does not postpone our inevitable deaths, it only makes the process for dealing with it after our deaths more of a headache for those left to deal with it after you are gone. Additionally, even if we do not care about what happens to ourselves or our assets after we are gone, we do have a responsibility to plan for those who are dependent upon us.
Having an estate plan, which will typically include having a Last Will & Testament, is important for anyone who is legally capable of making one, and especially important if you are responsible for others, if you own any assets, or if others are dependent upon you, whether you are responsible for them or not.
Who is affected if I do not have an estate plan?
Sometimes the best way to answer a question is by asking another question. In this case, the answer to the question "Do I need a Will?" can be answered by looking at the answer to the question: Who is affected if I do not have a Will, or an estate plan?
Under Ohio law, just because two people are married does not mean that everything automatically goes to the surviving spouse upon the death of the first spouse. Under Ohio law, just because you have children does not mean that they are entitled to an inheritance from your estate upon your death.
You need to ask yourself some of the following questions:
Who needs my assets or insurance upon my death?
Who do I want to have my assets or insurance proceeds after my death?
When do I want them to receive the assets?
Who do I want to control the disbursement of my assets and insurance proceeds after my death?
Ohio law currently only protects the interests of your surviving spouse and minor children from those assets that pass through your probate estate at your death. Ohio law also allows you to decide whether to let your assets pass through the probate process under the terms of your Last Will & Testament, or pass by directly by contracts such as beneficiary designations or joint and survivorship accounts.
How Often Should I Update My Estate Plan?
This is a question that we are asked almost daily. Our answers to this question will vary with each client based upon their own specific circumstances. Our own views also have changed over the years as our laws, and our lives, have become increasing more complex. There is no one answer. However, there have been some significant changes in our laws in the last few years: for example, HIPAA (the Health Insurance Portability and Accountability Act), the Ohio Trust Code and Florida Trust Code, and changes in Medicaid eligibility laws. Due to these changes alone, almost every estate plan prepared prior to 2013 should be updated.
Additionally, your estate plan should be updated as often as there are changes to any of the questions that we have asked about the need for an estate plan in the first place. If there is a change in who you want to receive your assets, or whom you want to control their disposition, or if there becomes a reason to hold assets for someone’s benefit, rather than giving the assets to them directly. The estate plan should be reviewed whenever there is a birth in the family, whenever there is a death in the family, a divorce, separation, or a marriage. Just because these events occur, does not necessarily mean that the estate plan documents will have to be rewritten or changed. It does mean that they should be looked at however, in case that a changed might be required.
Estate plans should also be reviewed for changes in the law. Just as we change, our assets change, and those who are close to us change over time, so too do the laws that effect us. Ownership rules, tax laws, transfer requirements all change over time, as well. How often you review and update your estate plan will also depend upon whether your estate plan is a simple plan, or a complicated plan.
Lastly, estate plans are impacted by the internal rules and regulations adopted by your bank, broker and insurance companies. We sometimes call these there "minion laws", because you are in their dominion and they get to make their own rules. They will each adopt their own rules about what they might want to see in a power of attorney or trust agreement, in order for them to allow your agent access to your accounts. For example, there are a number of banks that will not accept a durable power of attorney that is more than seven or eight years old. For them, it does not matter that the rules in Ohio allow for a durable power of attorney to be valid for your entire lifetime, regardless of how long you live.
With these thoughts in mind, we now like to use the following guidelines with our clients when deciding how frequently an estate plans should be reviewed:
Annually for complicated estate plans.
For young families, or individuals under age fifty, as often as there are changes in the family or beneficiaries that administer or receive you estate, but no less than every five to six years.
As you get older, and begin approaching retirement years (over age 50), the frequency with which you review the estate plans should increased to every three to four years.
Additionally, the following life changing events should trigger a review of your estate plan:
When you begin having children. When your children become adults. When your children are in their early twenties. When your children (beneficiaries) attain the age you originally specified to receive their inheritance in your Will or Trust. When your children get married, and begin their families. If you or your children (beneficiaries) get divorced. When your assets (including life insurance) approaches or exceeds the estate tax exemption amounts. When you or a family member (beneficiary) becomes disabled or incapacitated. When you retire. When ...... ( I think you get the message).