There are a few common misperceptions about estate planning. “Estate planning is only for wealthy people.” “I’m only 30, I don’t need an estate plan.” And of course, “I don’t have an estate to plan for.” At first glance these reasons might seem logical. After all, estate planning is often presented through the media in regards to multi millionaires and creating trust funds for children. However, there are several reasons why every person over the age of 18 years should create an estate plan.
First, let’s look at the myth that “estate planning is only for wealthy people.” While estate planning often does involve tax planning and business succession planning for those individuals who have acquired wealth, there are numerous non-tax purposes to have an estate plan. Do you have minor children? If you have an accident and/or become unable to care for your children, who will take care of them? If you don’t nominate a guardian and/or conservator for your children, the courts can look to state statute to determine who will be responsible for your children, both financially and personally. Maybe you’re remarried with children of a prior marriage. If you were to pass away, will your children receive your assets or will your spouse? If you do not create a will or trust that expresses your wishes as to who will inherit your property, the state intestacy statutes will be applied to determine your beneficiaries and in what proportion they will inherit. Do you have a beneficiary who is financially irresponsible and will waste their inheritance? You can aid them in preserving their inheritance with proper planning.
Second, people often believe “I’m only 30, I don’t need an estate plan.” Even though many of us remain close to our parents and perhaps even live with them or rely on them for financial support, once you reach the age of 18 years, you are legally considered to be an adult. This means that your parents are no longer automatically entitled to your medical records if you are involved in an accident or become ill. What if a doctor needs a decision about your treatment and your family members or significant other have conflicting opinions? Whose opinion will prevail? How long will it take to reach that decision? Consider the college student who does not yet know how to manage money and requests assistance from a parent. How will that parent access the account or speak to a representative without further authority? These issues can be avoided with proper planning and powers of attorney that legally appoint persons to act on your behalf.
Third, if you aren’t a millionaire, some believe “I don’t have an estate to plan for.” This is simply not true. Do you own personal property, bank accounts, or a house? If so, then you have an estate. Estates come in different forms and sizes. There is no minimum amount of wealth or possessions required in order to have an estate. If you were to die without proper planning, it is highly likely that your final expenses and administration costs will be higher than they would if you had an estate plan. This is true because the court will have to locate a person to act as your personal representative to collect your assets, pay your bills, and finally distribute your assets to the beneficiaries – who will also need to be located by the court. When you pass, someone will have to be there to make your final arrangements, whether you have very few assets or many assets. Why not nominate your personal representative and choose your beneficiaries to preserve the assets you do have and streamline the administration process? Your passing will undoubtedly be a difficult time for your loved ones. Make it easier for them to say goodbye with proper planning.