A lot of people assume that “estate planning” is only for the wealthy—if you aren’t a multi-millionaire, there is no reason to have an estate plan. For a variety of reasons, this could not be further from the truth. Let’s take a look at several reasons why people of average, or even modest means can benefit from estate planning.
First, let’s define some terms:
- “Estate” – Not just a word to describe a fancy house with a lot of land—in this context, it simply means everything you own. Big or small, your estate is the sum total of what you own at any given time, including when you die.
- “Estate Planning” – Just as the term implies, at its most simple, estate planning is simply the process of planning how your assets are going to be distributed when you die. It is more than that, though. You can also take control of decision-making that will affect you and your assets while you are still alive, and you can control the use of your assets long after you die. As important as your assets, estate planning also tends to encompass making and documenting decisions as to your own healthcare in the event you are incapacitated or at the end of life.
Now, back to some reasons you might want to do some estate planning.
1. You have minor children.
I don’t mean that your children are insignificant—certainly they are not. I mean your children are not adults. Properly drafted estate planning documents, such as your will and a durable power of attorney, will designate a guardian for your children. Otherwise, it may be up to a judge to decide who raises your children if you die or are incapacitated while they are still minors. If you have a friend or family member whom you think is the right choice to be your children’s guardian, then at least basic estate planning is very important. It is even more critical if you, like so many people, have family members whom you definitely would not want to have custody of your children.
By the same token, it is also important to designate a trustee to manage any money or other assets that your minor children might inherit, at least until the children are adults, and perhaps until they are well into their 20’s or 30’s, depending on the circumstances. Keep in mind that even if you have little in the way of cash or liquid investments, life insurance proceeds of which your minor children are the beneficiaries will need to be handled by a trustee until they are adults. These issues can be addressed through estate planning, in a properly drafted will or a separate trust document. Otherwise the decision as to who serves as trustee or custodian of the assets will be decided by a judge.
2. You don’t want the legislature to do your estate planning for you.
Dying without a will is know as dying “intestate.” Like all other states, Washington has a set of laws governing intestate succession; that is, the legislature has enacted a default plan for how your assets are to be distributed upon your death. These laws specify which family members will receive portions of your estate. If you don’t have any family closely related enough to satisfy the law and receive your assets, your assets will go to the State of Washington. See this article in our knowledge base for a visual guide to Washington’s laws on intestate succession.
If you want to deviate from the legislature’s default estate planning, you must have a will or leave your assets in a trust. A couple of examples in which a will is a necessity: you want to leave a gift to someone outside of the legislature’s intestate distribution plan, such as a charity, a friend, or a distant relative; you are married without children, and you want your spouse to receive all of your separate property, instead of a share going to your parents, siblings, or even more distant relatives.
3. You have dependents who need help managing their affairs.
It is not uncommon for people to be concerned for the way in which their loved ones might be impacted by even a small direct inheritance. A trust can provide support without giving the beneficiary unfettered access to the assets. The need for a trustee to handle assets on behalf of minor children is discussed above. However, others may also benefit from having a trust rather than a direct inheritance. For example, a child with substance abuse issues, for whom a sudden influx of money might induce a binge, and the wasting of the inheritance, if not more dire consequences. Other examples include elderly or disabled beneficiaries. Even healthy, well-adjusted young adults may be better off having access to a relatively large sum (compared to their regular income) deferred until they are more mature.
4. You want to have some say in your medical treatment, even when you are unable to speak for yourself, or you want to choose who makes decisions on your behalf in the event you become incapacitated.
An advance medical directive gives you the opportunity to detail the types of treatments and life-saving measures you want to receive in a variety of circumstances. A durable power of attorney for healthcare allows to you go beyond the advance medical directive and appoint a trusted family member or friend to make decisions for you in the event you are incapable, due to incapacity or loss of consciousness, whether temporary or permanent. Although state law generally gives spouses, parents and adult children the right to make healthcare decisions for an incapacitated person, confusion and conflicts can arise unless a specific person is appointed in writing to make decisions.
These documents are best used together, so that the attorney-in-fact appointed under the durable power of attorney has guidance in the form of the advance medical directive. We recommend that all adults, regardless of age or health status, should have both of these important documents prepared, executed, and kept in a location where loved ones can find them if needed.
5. You want to ensure that your children or grandchildren ultimately benefit from your assets, even if your spouse remarries after your death.
If, like many Washington and Idaho residents, you have been married most of your adult life, most of your assets are likely to be community property. In its simplest terms, community property is jointly owned by spouses. Without a will, your entire interest in your community property will go to your surviving spouse outright. While that may sound great on the surface, what happens if your surviving spouse remarries? He or she may commingle those assets with those of his/her new spouse, or he/she may make a will that leaves all of his/her assets to the new spouse. If you have children or other loved ones to whom you would eventually like the benefit of your estate to go, it may be better to have your share of your community property to go into a trust that will help support your surviving spouse during his/her lifetime, but then go to your children or other designees upon his/her death.
These are just a few of the reasons you should consider estate planning even if you don’t consider yourself wealthy. Basic estate planning does not have to be unreasonably expensive: many law firms offer fixed prices for packages of estate planning services. Using an attorney, rather than a do-it-yourself website, will ensure that your documents are properly tailored to your unique circumstances.
Don’t put it off any longer—call or email a qualified estate planning attorney today to take charge of your estate plan.
Lucent Law provides comprehensive legal services in the areas of real estate, business law, and wills, trusts and estates. Additionally, Lucent Law’s Forms & Essentials online platform provides defined scope legal services that are easy to understand and simple to purchase, all at reasonable fixed prices.