The True Cost of Not Having an Estate Plan

The High Price of Doing Nothing

Many people delay creating an estate plan because they think they don’t need one or want to avoid legal fees. But the cost of doing nothing can be extreme. That one annoying aunt you hate? They could get all your property. Your minor children without an appointed guardian? Could end up in foster care, and get your belongings all sold. Even if your loved ones inherit your assets as desired, they could be stressed and conflicted without an estate plan.

Today, we are going to reveal the real consequences of dying or becoming incapacitated without an estate plan, and how to prevent them with affordable tools and actionable tips.

What Happens When You Don’t Have an Estate Plan

Intestacy

Without a proper estate plan, your estate will have the condition of intestacy. Intestacy happens when you die without a legally valid will. Your assets will be distributed according to your state laws. If you have any minor children, the government will decide where they go.

Probate

Probate court steps in to manage your entire estate if you don’t have a valid estate plan. While there is usually a probate process if you have a valid will too, the probate process without an estate plan can be much more stressful for your loved ones. Decisions may be made that go completely against your desires.

If there are certain parts of your estate plan that are lacking, it can also cause complications. For example, if nowhere in your will or bank accounts have you listed a beneficiary, your account funds would become part of your estate and go through probate.

Loss of control

You would have no say in who gets what if you don’t have an estate plan. The government will control the fate of your assets, children, and estate. If you are incapacitated and cannot make any medical decisions, your distressed loved ones or the hospital might be forced to make certain decisions for you: life support? Organ donation? DNR? These are all choices you could have made in your estate plan.

Seriously consider the ramifications if you have no say in who gets what, who cares for your minor children, and what medical treatment you may or may not get. They may pull your life support too early or sustain it for decades even if you don’t wake up.

You need an estate plan. Otherwise, the government would be the one to decide the future of you and your family.

Financial Costs: The Probate Trap

Court Fees and Attorney Costs

Probate can eat up 3% to 7% of your estate’s value. That is a significant amount even if it might not sound like it.

Probate court can also take over a year to go through, especially if you leave no will and the court has to assign someone to handle your estate.

Dealing with your assets, such as a $300,000 home, could cost over $10,000 or $20,000 in probate court fees. That is a lot of expenses that could have stayed in your loved ones’ pockets.

Delays in Asset Distribution

Many probate cases take 9 to 18 months. They make families wait for the distribution of locked funds and assets for potentially over a year after your death.

If anyone wants to dispute an asset distribution choice, they might file an objection with the dispute court. Families that don’t agree over the asset distribution might have to endure severe conflict for years to come. These issues can be easily prevented through a clear will and/or trust. An estate plan letter of intent can also clarify what you mean.

Taxes and Unclaimed Assets

You might miss out on tax efficiency opportunities if you don’t have an estate plan. Establishing a trust can be a great way to reduce the tax burden on the inheritance, maintaining value.

A will or trust can help you bypass the above costs and speed up the process of distributing your assets.

Tip: Platforms like LegalZoom offer affordable estate planning options to avoid probate pitfalls.

Emotional Costs: Stress, Conflict, and Uncertainty

Family disputes

Loved ones often fight over money, property, and sentimental items. Heirlooms, valuables, and other assets can cause insurmountable family disputes. This kind of emotional cost cannot be quantified, but it is very real and very common. Even the most harmonious families can find the death of a loved one to bring about family disputes.

If you get injured or ill, and cannot make healthcare decisions lucidly, your loved ones and the doctors would also have to make your healthcare decisions. Family members can disagree immensely over what medical treatment, life support, organ donation, and other care you should receive.

Decision paralysis

Don’t let your loved ones have to guess what your medical wishes or funeral preferences are. It is a lot of emotional stress, potentially for the rest of their lives, if they need to wonder if they’ve made the right or wrong choice.

By planning out your estate, you can help your family know exactly what you want. This ensures an easier time for them and peace of mind for you.

Emotional burden

During a time of grief, having to face legal confusion only makes everything worse. To prevent this emotional distress, even a simple estate plan can go a long way. It is a final act of love and kindness, to help your loved ones avoid family conflicts and legal problems.

Personal Costs: Losing Control Over Your Life Decisions

Not having an estate plan doesn’t only hurt your family. It also hurts you. You can lose control over your life and death decisions.

No power of attorney

If you assign someone power of attorney, they can make financial or legal decisions for you if you become incapacitated (e.g. in a coma). If you didn’t appoint someone to be your agent, then the court would appoint someone who makes decisions on your behalf. Possibly, probably, they would not make the same choices you would.

No healthcare directive

Healthcare isn’t as simple as there being one single best option for everyone. Each individual has their own medical treatment preferences. Do you want life support, or put a DNR order out? Are you comfortable with blood transfusions or other medical treatment? Is organ donation something you care about?

The common truth is, doctors and relatives often disagree about medical treatments. Everyone can benefit from having a healthcare directive in place so that their loved ones will know what to do without feeling bad about making a stressful choice.

Real-life examples

Let’s take a look at some case studies where not having an estate plan costs a family significantly.

• John leaves no healthcare directive because he is young, but gets into a car accident and falls into a coma. His two children start arguing over whether they need to pull life support after a month of no change. The family is already struggling with finances so there is a lot of emotional pressure.

Takeaway: Estate planning ensures your voice is heard even when you can’t speak for yourself.

The Hidden Costs for Loved Ones

Time

Don’t underestimate the time and effort it takes to go through probate for an unplanned estate. Managing it can take months of paperwork and visits to the probate court.

Money

Probate for an unplanned estate can be expensive. There may also be other urgent expenses and legal problems that require family members to pay out of pocket.

Relationships

Disputes over inheritance or roles can permanently damage family relationships. Many families that are harmonious and loving find themselves disagreeing over a loved one’s healthcare, funeral rites, and last will meaning.

Peace of mind

Without clear estate instructions, grief becomes complicated by guilt and uncertainty. It’s horrible to imagine that your loved ones might have to deal with a lack of will.

The Affordable Alternative: Planning Ahead

Myth v.s. Reality

It’s a great myth that estate planning is only for the wealthy. It is actually for anyone who has dependents and assets–and it also encompasses medical treatment preferences, which many do not realize.

The truth is that estate planning can be affordable and accessible. Here are some of the best estate planning tools to make it simple and stress-free.

LegalZoom: You can make a valid will easily and fast with LegalZoom’s online will creation. It also enables easy trust and power of attorney creation.

Ethos: Ethos offers affordable life insurance to protect your family’s future. Life insurance is particularly important if you are the sole income earner. The death benefit can go a long way in supporting your family as they grieve and need to handle a wide range of expenses.

Tip: You don’t need everything at once. Start small with a will and healthcare directive. You can build it up over time.

How to Prevent These Costs—A Simple Roadmap

1. List your assets and beneficiaries

First, list out all of your assets. Don’t forget your digital assets, such as wallets, cryptocurrency, and social media accounts.

Next, list out your beneficiaries. You may also want to add “backup” beneficiaries for major assets so that in case your chosen primary beneficiary is unwilling or unable to accept the asset, the asset can go to the contingent beneficiary.

Decide who you want to give what. Asset distribution is an important part of estate planning. It can save your loved ones a lot of trouble.

2. Create essential documents

Take the time to devise your documents. It is not necessary to have an estate attorney, though they can be helpful, especially if you have a complex estate.

• Will
• Power of attorney
• Healthcare directive
• Trust

You can use tools like LegalZoom to create valid estate plan documents.

3. Review your life insurance coverage

Life insurance is a valuable financial cushion. If you pass away, your designated beneficiary can receive a large death benefit.

Death benefits are fast and significant, providing much needed financial support. However, it is important to secure a good, reliable life insurance policy so that there are no lapses.

4. Store documents securely and tell loved ones where to find them

Make sure that your estate plan is securely stored, digitally and physically. Tell your family or attorney how to access your estate plan documents.

5. Review every few years or after major life events

Whenever a major life event takes place or your sentiments change, it’s time to update your estate plan. Major life event examples include:

• Marriage
• Children
• New home
• Divorce
• Death

Conclusion: Planning Is Priceless

Grief, pain, stress, effort–these are all intangibles. If you don’t plan out your estate, your loved ones may become burdened. The real cost of not having an estate plan can’t be measured by a dollar sign: it can be far worse.

Start planning your estate today. Ethos can help if you’re not sure how to get started with finding a life insurance policy, and you can make a fast, valid will through LegalZoom.