The Surprising Costs of Dying Without an Estate Plan

While nobody enjoys pondering their own mortality, dodging the topic of estate planning could leave an unexpected mess for your loved ones to untangle. Without a properly drafted estate plan, which includes a will or trust and other legal documents, the fate of your hard-earned assets and precious belongings could be decided by a probate court. This may result in hefty fees that diminish your legacy. But that’s only the beginning of what could be a challenging time for those left behind.

Here are four more surprising costs of neglecting to put an estate plan in place.

1.     Unexpected Taxes

When you don't have an estate plan, you miss out on strategies to minimize the taxes your estate may need to pay to the federal government. Several states impose an inheritance tax on heirs who receive assets after you pass away. However, you can design a plan that helps ensure your estate and your heirs retain a larger portion of your assets instead of paying more in taxes. 

2.     Loss of Government Benefits

Needs-based government programs, like Supplemental Security Income (SSI), have strict asset limits. While often well-intentioned, providing an outright inheritance to heirs who receive government benefits could do more harm than good. Failing to set up a special needs trust could cause the beneficiary's assets to exceed the threshold, potentially disqualifying them from the benefits program.

3.     Unnecessary Legal Expenses

If you’re a single parent with minor children and you pass away without an estate plan, the court might step in to appoint a legal guardian to oversee their inheritance. The associated court costs can significantly reduce the inheritance meant for your children. Save time and money by creating an estate plan that names a guardian for your minor children and includes a trust to manage their assets.

4.     Family Conflict

Without a will or estate plan, family members may have differing opinions on who should receive what assets, leading to intense disagreements, resentment, and even costly legal battles. Family conflicts over asset distribution not only strain relationships but could drain financial resources for the intended beneficiaries.

For example, if a parent passes away without a will, their adult children may disagree on who should inherit the family home. One child might believe they should receive it due to an emotional attachment, while another believes it should be sold and the proceeds divided equally – a situation that could have been avoided with a clear estate plan.

Learn more about how to ensure your family is financially taken care of after you pass away when you download The Survivor’s Guide to Account Settlement. This survivor’s guide could help you in drafting a comprehensive estate plan.