I have had a number of people over the years tell me “I don’t need to estate plan – I don’t have much of an estate to plan.” Of course, these same people often follow up this statement with the question: “How big of an estate do I need before I worry about estate planning?” The purpose of this article is to explain what Estate Planning is and why it is important for even those without a large estate.
The question shouldn’t be “How big of an estate do I need before I worry about estate planning” – the real question is “If I don’t do any Estate Planning, who will be affected by my lack of planning?” The point of Estate Planning is to, first, set in place legally enforceable processes to be followed if you become incompetent because of an accident, injury or disease, and second, to identify who will manage your assets and how that person will manage your assets upon your passing. The answer to the question “If I don’t do any Estate Planning, who will be affected by my lack of planning?” is your spouse, your parents, your children and your siblings are the ones that could be negatively affected if you don’t do your Estate Planning.
If you don’t create and sign the appropriate Estate Planning documents before you become incompetent, then your spouse, parents, siblings or adult children will likely be required to go to Court to have a judge decide whether or not you truly are incompetent and if so, then to decide who should manage your financial affairs, your medical care and make sure your day-to-day needs are met. This involves paying attorneys to draft Court documents, paying Court filing fees, have a random Judge decide whether or not you are incompetent and, if so, who will manage your life from that point forward and how that person will manage your life. You can avoid the time, expense and loss of control of this Court process by having a proper Estate Plan drafted. The Courts do not generally need to be involved at all if you have a proper Estate Plan, to include a Financial Power of Attorney, a Medical Power of Attorney and a Living Trust.
The answer to the question “How big of an estate do I need before I worry about estate planning” begins with the definition of ‘Estate Planning’. Some simply define Estate Planning as the process of preparing for the transfer of a person’s wealth and assets after his or her death. I think a better definition of Estate Planning is as follows: the process of preparing and signing documents that, first, identify who will manage a person’s assets and manager his or her affairs if he or she becomes incompetent. Second, identify who will manage the gathering, liquidating and distribution of that person’s assets upon their death, and third, how the person’s assets will be gathered, liquidated and distributed upon his or her death. This definition of Estate Planning is much broader and much more accurate as to the true purpose of Estate Planning.
There is no one-size-fits-all to Estate Planning, and the answers to the above questions will really depend on your situation. But overall, no matter how many or how few assets you think you have, everyone can benefit from Estate Planning. Contact Addison Larreau at Mountain View Law Group today to discuss your estate planning questions – (801) 393-5555.