Give Your Family the Gift of an Estate Plan, and Ask the Same of Them
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What are the essential elements of an estate plan?
How to prepare for when you're not able to manage your money temporarily or eternally. That and more on this Saturday personal finance edition of the Motley Fool Hidden Gems Investing Podcast.
Well, my friends, I have bad news. You and everyone you know at some point is going to pass away. And before then, you or the people you love may become physically or mentally incapacitated. But despite these certainties and possibilities, most people don't have an estate plan, and if they do, it's often outdated. Here to explain how you can protect yourself, your family, and your assets with an estate plan is attorney Jill Mastroianni, the host of the Death Readiness Podcast. Jill, welcome to the show.
Thank you. Thanks for having me.
What happens if someone becomes incapacitated without an estate plan?
So let's start with the basics. What's your definition of estate planning?
Well, first I would say figuring out what is going to happen to you if you can't take care of yourself. And then as a secondary matter, figuring out what's going to happen to your stuff when you're no longer alive.
So that involves all kinds of things. You think about everyone you know, everyone you love, everyone you want to take care of, and as well as everything you own. If you don't have an estate plan, what happens when someone dies or becomes incapacitated without it?
So if you become incapacitated without an estate plan, then there's a process called getting a conservatorship or a guardianship where the court determines who is going to be responsible for making decisions for you. This process is long and it's often quite expensive. And if you're going to see a family disagree, this is where they're going to disagree the most because it's someone who's
How can an estate plan prevent family disputes?
taking care of not only financial matters, but also taking care of medical decisions. And a lot of people disagree about how that should go.
I think that you're highlighting one of the most important points of estate planning. A lot of people think in terms of money, costs, lawyers, but one of the biggest things that it will accomplish is if you have an estate plan, you're going to avoid a lot of family strife.
Yes. And I have found that people are more willing to accept decisions that you might have made about your end of life care or who you want to be making decisions on your behalf. If you have those conversations with your family in advance. So it's not as well, I chose my son, but maybe everyone else is thinking, oh, it's because he pressured me. me to choose him. But if I have those conversations in advance with the entire family as to what I did and why I did it, people are more likely to accept that decision.
What is the process for probate and why is it important?
So what happens if someone passes away without an estate plan?
Well, there's always a plan. It's not as if someone dies and then we just wonder forever what is going to happen to their stuff. There is a plan. So for assets that you own jointly with somebody else with a right of survivorship, then that asset is just going to go automatically to the joint owner. For an asset like a retirement account, like an IRA or 401k, you might have a beneficiary designation, like I have named my husband as my designated beneficiary. So that's just going to go straight to him without anybody doing anything. But those assets that I own individually in my own name where I haven't named any type of beneficiary, that's going to go through a process called probate, which is a court administrative process to figure out where your stuff should go.
And if you don't have a will, then the state essentially creates one for you and says, who among your family members gets those probate assets?
And that's an important point in that when it comes to the laws about estate planning, it's very specific to the state, right? So someone like living in Virginia, like I do, may have a different situation than someone who lives in another state, Michigan, Tennessee, California, because each state has their own laws.
Right. Each state has its own laws. And what I was surprised to learn about Michigan, where I live now, is that if I am married and I do not have children, but I do have a surviving parent, then the state says that my assets don't just go to my surviving spouse.
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Chapters
8 chapters
1
What are the essential elements of an estate plan?
0:02–0:49
2
What happens if someone becomes incapacitated without an estate plan?
0:49–1:49
3
How can an estate plan prevent family disputes?
1:49–2:49
4
What is the process for probate and why is it important?
2:49–5:13
5
How often should you update your estate plan?
5:13–7:19
6
What role do trusts play in estate planning?
7:19–9:14
7
How should personal belongings be handled in an estate plan?
9:14–12:38
8
What strategies can you use to encourage family members to create their estate plans?
12:38–24:18