Estate Planning is either "pay now" or "pay later"
August 2016
There is an old television commercial tag line that said “you can either pay now or pay later”. The idea of the commercial was that those who “pay later” end up paying a lot more, whereas those who are proactive and plan for the future save time and money. In many situations the same is true when it comes to estate planning.
The “pay now” approach to estate planning means preparing in advance for a physical or mental incapacity and the disposition of your estate at death. The “pay later” approach means being unprepared by doing nothing or underprepared by relying on out of date or “do it yourself” documents which will force your loved ones to react to situations that happen.
I always advise my clients that they have the same choice. The choice is between having an estate planning attorney draft the appropriate legal documents at a flat fee or paying substantially more in hourly fees to react to an incapacity or death in the family. Worse yet, if there is no plan or a bad plan in place it may cause family discord, disinheritance or wasting of assets.
For starters, every person who is 18 years old or older must have powers of attorney in place (both financial and healthcare) to prevent a court guardianship proceeding in the event of a disability. This includes married couples. Under WI law, not even a spouse can make financial or healthcare decisions without a power of attorney or court order. Many times individuals have a health issue and are able to verbally instruct the hospital or fill out standard authorization forms. The problem with this is that these types of authorizations are temporary in nature and only last as long as you are in the hospital. The “pay now” choice would be drafting permanent (unless revoked or changed) powers of attorney that appoint individuals to act as your financial and healthcare agents. The “pay later” choice would involve your family going through a guardianship proceeding in court. This typically requires 3 attorneys: a judge, an attorney representing the family and a guardian ad litem appointed by the court (at your expense) to represent you as the incapacitated person.
Ensuring your family receives your assets quickly and cost effectively at passing are the goals of any “pay now” plan. For most families, the goal is to avoid probate. Simply having a Will drafted does not avoid probate, it actually guarantees probate for most individuals who own real estate. Avoiding probate can typically be accomplished through beneficiary designation planning. However, proper planning for families with more complex situations potentially includes trust planning. The “pay later” alternative is either having no legal documents in place, outdated legal documents, or “do it yourself” documents that may or may not achieve the desired results. In most cases, time consuming and costly probate proceedings will ultimately determine who and how the family receives assets. If an appropriate plan was not put in place the family is “stuck” with results.
Making the choice for most families is not difficult when given the options between “pay now” and “pay later”. Yes, it may take a little time and expense now to put an appropriate plan in place but the alternative is that your family will end up spending substantially more time and expense if you don’t.
