Our Connecticut readers may know about the looming "death tax" increase that is set to take place on January 1 of next year if Congress does not act to keep the rates at current levels. However, that is not the only looming estate planning crisis.
Across the nation, roughly 2.5 million people die annually; most without wills, powers of attorney or any of a number of other basic estate planning documents. That lack of planning can cause a host of problems for the loved ones the deceased leaves behind.
For young adults, drafting a health care power of attorney and updating it throughout life can save many headaches in case of disability. For example, an 18-year-old may be on his parent's health care plan, but without the power of attorney a young adult's parents may not be able to make health care decisions for them.
That means that if the young adult gets hurt in an accident, which happens to about 250,000 young Americans per year, his parents would need to get court approval to make decisions on the young adult's behalf if he is disabled -- even for a short time.
For unmarried couples living together, a will is often preferable to a cohabitation agreement. Cohabitation agreements, which purport to divvy up assets, are often contested by blood relatives in the event of death. A living trust or will would do a better job of cementing the couples' intent.
For parents, whether single, cohabitating or married, naming a guardian in a will can pave the way to a smooth transition for their kids if both parents die.
These concerns are just the tip of the iceberg. A little estate planning can go a long way in solving many of the problems that can arise when a person dies or is disabled.
Source: Forbes, "The Real Estate-Planning Crisis Isn't About Taxes," Deborah L. Jacobs, June 27, 2012