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While most adults are aware they should make plans for the unexpected, the majority of us have not done so. In fact, as reported by AARP, only 4 in 10 American adults have a will or living trust. Older adults are a bit more prepared—about 58 percent of baby boomers (those between the ages of 53 and 71) have engaged in at least some level of estate planning.
Although it is obviously important for older people to have an estate plan, it is just as important for younger adults, particularly those with minor children. That being said, 78 percent of millennials do not even have a simple will. When asked why they put off estate planning, the top two reasons were that they simply “hadn’t gotten around to it,” and that they “don’t have enough assets to leave to anyone.”
In the end, the importance of having an estate plan cannot be overstressed. If you have any level of assets at all—which most people do—then you have enough assets for a will. Yet many of us will spend more time planning a vacation—or even where to eat dinner–than deciding who will inherit our assets and who will make extremely important decisions for us should we be unable to do so. Estate planning is not only for the wealthy. Consider the following reasons you should have an estate plan:
- Your assets will not end up with unintended beneficiaries. It is a sure bet there are people you love and care about, and that you want to leave those people your assets. If you do not make a specific plan to do so, the state may well decide to give your assets to those you would not choose.
- Young children will be protected should the unthinkable happen. Even if you are young, unexpected things happen every day, and you want to ensure your children are well-taken care of by the person or persons of your choice, in a manner you approve of.
- Having an estate plan can ensure your loved ones are as protected as possible from taking a big tax hit when you die. Careful estate planning can help you create the smallest tax burden possible for your loved ones, reducing federal and state estate inheritance and estate taxes.
- Having an estate plan can eliminate arguments and hard feelings between loved ones after your death. You—like most of us—have likely heard “horror” stories of family members who went to war over a loved one’s assets. You do not want to be responsible for this happening in your own family. A comprehensive estate plan allows you to make sure your assets are handled in the manner you would want them to be handled.
While each state differs in how assets are handled for those without a will or trust, in the state of Ohio, should you die without an estate plan, the following could happen:
- If you have children but no spouse, your assets will be split equally between your children after all outstanding bills, taxes and lawyer fees are paid.
- If you are married but have no children or parents, your spouse receives everything.
- If you are married and have children with your spouse, your spouse will still receive all of your assets.
- If you are married and have one child from a prior relationship, your current spouse receives $20,000 and the remaining balance is split between your spouse and your child.
- If you are married and have more than one child from a prior relationship, your current spouse receives $20,000, with the remainder being split 1/3 to your current spouse and 2/3rds split between the children from a prior relationship.
- If you are married, have at least one child with your current spouse, and children from a prior relationship, your current spouse inherits the first $60,000, plus one-third of the balance, with the rest divided between the children.
- If you are not married and have no children, but your parents are alive, then your parents will inherit all your assets.
- If you are not married and have no children and your parents are not alive, then your siblings will inherit all your assets.
If you would not want your estate split up as detailed above, then you should definitely consult a Kettering, Ohio estate planning attorney who will help you construct the best estate plan for your life situation. Otherwise, an Ohio probate court will account for your assets and debts, pay your debts, distribute the remaining assets to your heirs, and appoint guardians for your children. Not only will having an estate plan help those you leave behind, it will give you peace of mind, knowing you have prepared, to the best of your ability, for the unexpected. The estate planning attorneys of Lovett and Lovett can help you prepare for the future, answering your questions and guiding you through the process.