One of the most common misconceptions that people have regarding estate planning is that they do not have any assets that will need to be distributed or settled when they pass away. They may think that because they do not have robust investments, property ownership or children that the system will simply handle the money, debt or assets that a person does have appropriately.
However, this can be a very risky assumption to make and it can allow complete strangers to make crucial decisions. In many cases, the wishes of people who die without an estate plan or even a formal will in place may be completely overlooked or ignored. In order to avoid this from happening, New Jersey residents may want to seriously consider the reality of what can happen when a person does not have an estate plan.
For example, one woman recently spoke with a financial advisor about her retirement plan. As far as she was concerned, that was her only asset and she just wanted to leave her estate to her church. But she had no documentation in place specifying her wishes, and the advisor quickly determined that the situation could end up playing out very differently than the woman intended.
After a brief meeting, the woman revealed that while she had no kids and was not married, she does have a brother with whom she has not had a good relationship. If the woman did not take steps to formally designate the church as a beneficiary, her estate would likely be given to her brother. Upon learning this, the woman decided that she did, in fact, need to have an estate plan.
There are details like this that can be easy for people to overlook, especially when people are unfamiliar with state estate planning laws. Every person's situation is unique and must be considered carefully when determining what type of estate plan might be in his or her best interest. In order to avoid the unfortunate consequences of not having an estate plan in place, it could be wise to discuss options, potential obstacles and solutions with an experienced estate planning attorney.
Source: The Wall Street Journal, "When a Client Has No Estate Plan," Austin Kilham, April 18, 2014