Attorneys stress importance of estate planning
A will now means fewer headaches later, especially for millennial parents with kids.
The majority of Americans don’t think about estate planning.
It generally is an uncomfortable topic that many households fail to talk about because it is associated with the fear of death.
According to a survey done by caring.com, a website that offers caregiving resources, only 42 percent of adults currently have done estate planning, such as a will or a trust, and 36 percent of U.S. adults with children under 18 have an estate plan.
Steven Starnes, a certified financial planner for Grand Rapids-based Grand Wealth Management who helps clients with estate planning, said the average age of the firm’s clients are between 55 and 60 — those who are on the verge of retirement — but he insists there is another sector of the U.S. population that needs to be proactive and take the topic seriously.
“Millennials, especially young people with kids, need to make sure they have a will, an estate document,” he said. “This often gets overlooked. If you have a will, you can list who should look after your kids, as the guardian. If you don’t, the court will. You can probably make a better decision than the court can, so you might as well do it yourself. Another reason is if you have life insurance and you have some savings, it could lead to your own child inheriting a lot of money.”
Although many young parents may be focused on present-day expenses, such as paying off student debts, purchasing a house or traveling, Stephanie Mushna, another certified financial planner at Grand Wealth Management, said they can achieve their present goals and also plan for the future by slowly increasing their savings amount.
“It is hard, but pennies add up to dollars,” she said. “Making the smallest change, especially when you are young, can have a really big impact on the future. You can do automatic savings, if you move over $5 each month over to a savings account you can end up with 30, 40 years of investment.”
Those savings can result in children inheriting that financial asset, as well as properties from their parents if they die and have an official will or a trust document detailing their desires.
However, Laura Jeltema, an attorney who practices estate planning at Grand Rapids-based Warner Norcross + Judd, said it takes months, if not years, for the probate court to divide the assets and determine where they should go.
“When you don’t have a will, it is difficult because there are default laws in Michigan that dictate the order (of who gets the assets),” she said. “After probate is open, the personal representative has an obligation to provide notice of the death of the person and that is a notice to creditors, which is called notice to unknown creditors, and from the date that notice is publicized in the newspaper, potential creditors of the person who died have a four-month window to come back and say, ‘He or she owed me money.’ So, at a minimum, an estate administration can at least take four to five months because it would be unwise to distribute the estate assets until we know that there are no creditors that will appear to say that they are entitled to some of the assets before the beneficiaries.”
Although estate planning is aligned with death and the distribution of assets after death, Chris Caldwell, an estate attorney at Grand Rapids-based Varnum, said there is more to estate planning.
“There is also an aspect of estate planning that deals with things before you die, specifically, what happens when you become incapacitated,” he said. “There are documents that you can routinely have in addition to a will or a trust, called a durable power of attorney for finances and durable power of attorney for health care, in which you can name people who can handle finances and medical matters on your behalf if, in fact, you become unable to do so.”