Estate Planning Misunderstanding #1
Estate planning is only for the old.
(This is the first in a series of estate planning misunderstandings.)
The fact is, if you are an adult, you already have an estate plan. We all do. It was drafted on our behalf by the legislatures of the state in which we reside, and is governed by the state laws of intestacy. If you die “intestate”, meaning without a Will or a trust, these laws govern who will inherit your assets. If you have minor children, these laws also govern who will be chosen to be their guardian and the trustee of their inheritance until they reach the age of 18. It will also give your children complete and unfettered access to their inheritance upon reaching that age. Might it be harmful to an 18-year-old to have unrestricted access to any significant sum of money? As you might imagine, the state laws of intestacy might not arrive at the same choices that you would make.
It may also mean that your family may also have to endure a lengthy, public and possibly costly probate in order to administer the estate. Additionally, all of the proceedings and the choices made by the probate court will be public record, open to review for anyone who cares to.
If instead you may want to take control and create your own plan, one that reflects your choices and your wishes. Then regardless of your net worth or age, estate planning in some context is appropriate for you. It may involve little more than drafting a Will to distribute your assets according to your wishes, and appointing a guardian in the Will for any minor children, along with Powers of Attorney for Health Care and for Finance (two separate documents).
Kevin P. McFadden, Knollmiller & Arenofsky, LLP
Special thanks to attorney Robin C. Bevier from Northern California where I shamelessly relied upon his excellent article.