I am often asked by people whether they really need an estate plan. My response is that if you are over 18-years-of-age it is absolutely vital to have an estate plan. So much so, in fact, the state of California has provided a default plan for those who fail to do their own planning, but you will hate that plan.
I Don’t Have Much, Do I Really Need A Trust?
My general rule of thumb is that if you have assets subject to probate or if you have responsibilities, then you should seriously consider a revocable living trust.
Wills are subject to probate. Your will must be filed with the court and becomes a public record that anyone can access. In California, this can subject the estate to rather significant expenses. It also subjects your beneficiaries to salespeople and schemers who will obtain their identities from these publicly available documents.
Young parents just starting out can protect each other and their children by establishing a trust and funding it with an inexpensive life insurance policy, providing financial security for their children.
I Have No Assets or Responsibilities
Even if you can answer “no” to those two questions if you are a legal adult you still need an estate plan. When we are minors our parents or legal guardians are authorized to receive information about us and make decisions for us. That all changes once we are 18 and legal adults.
As an adult, your parents no longer have the legal authority to access your academic, financial or medical information. They no longer have the authority to make financial or medical decisions for you. For these reasons, I made sure my 18-year-old child had the right plan in place before she left for college.
I Want To Wait Until…
Procrastination is a common theme when it comes to estate planning. There are so many other things to do with our time that sitting down in a lawyer’s office to contemplate our death or incapacity seems like it can wait.
People often tell me that they want to wait until they are married, or have children, or buy a house, and the list goes on. Estate plans are not bundles of documents. They are the action of planning for life events. The documents are tools. When the tool is no longer effective at achieving the goal of the plan, that tool is updated or replaced.
If you are not married, do your legal planning and then when you do get married update your life plan and the legal structures that help ensure you achieve your goals. If you do not have children, do your legal planning and when you do have children update your plans. If you are renting an apartment, do your planning and update matters once you purchase your home.
The take away here is that now is the time to do your planning and those plans need to be updated. At a minimum, we recommend reviewing your plans and supporting legal structures every three years or following a major life event; e.g., marriage, birth of a child, starting a business, etc.
