Did you know that less than half of the American adults over the age of 18 have done any estate planning?
Why don’t you have an estate plan? Is it because you think that you do not have an “estate”? Forget for a moment that you do not have “an estate” in the sense that George Steinbrenner or Steve Jobs or Prince had an estate, and consider the basic elements of a complete estate plan: a Health Care Proxy, a Power of Attorney, a Will, and coordination of beneficiary designations on testamentary substitutes (such as pay-on-death bank account, IRA, pensions, annuities, etc).
Do you remember the case of Terri Schiavo? In case you do not remember: Schiavo slipped into a persistent vegetative state after suffering cardiac arrest and her husband and parents battled in court for years (1998 to 2005) over whether her husband could terminate life support. He stated that it would have been her intent to terminate life support, but her parents maintained that she would have wanted all heroic medical measures taken to sustain her life. Who do you want to make this decision for you (in addition to less significant medical decisions when you are unable to do so yourself due to short term acute illness or medication)? Does anyone know what you would want in this situation? Do you want your loved ones arguing about it? Do you want the courts to be involved? All of these issues can be addressed by appointing an agent to make medical decisions for you in a Health Care Proxy and Living Will.
A Power-of-Attorney enables you to appoint a trusted family member or friend to manage your personal and financial affairs if you become unable to do so yourself. For single adults (including domestic partners), having an agent can be crucial; if you do not have a joint account, no one can write a check for you and the only recourse is for someone to seek court involvement. The same is true for same-sex married couple who find themselves in a jurisdiction that does not recognize their marital status. For married couples it can be a very convenient document to have in place, particularly if you do not maintain exclusively joint accounts.
“Why do I need a Will?” Answer: because if you do not have a Will, state statutes will decide for you and you might not like how your property is distributed to your heirs. In New York, a surviving spouse with no children will inherit the deceased spouse’s entire estate, but if there are children, then the surviving spouse may not inherit your entire estate. If you are “single” without children (including domestic partners or long-term cohabitants) your parents or siblings or more remote relatives will inherit your assets. If you leave behind a domestic partner, he or she will inherit nothing, unless you execute a Will that provides otherwise. Additionally, if you have children, your Will can designate a guardian for your child in the event of your untimely demise. If you neglect to designate a guardian, the courts will decide for you.
Lastly, no estate plan is complete unless beneficiary designations on testamentary substitutes are reviewed for consistency with the intent expressed in the Will.