If you have yet to create an estate plan, you likely have an explanation for why that is so. You may feel you don’t need one yet, either because you have yet to amass a sizeable fortune or because you have yet to settle down and start a family. The truth, however, is that every adult can benefit from estate planning. To help you better understand the importance of estate planning, let’s explore why you need an estate plan.
Ensuring that Your Wishes Are Honored
Like many people, you may be operating under the belief that creating an estate plan cannot help you if your assets are less than extremely valuable (in monetary terms). Whether you have already amassed a complex and valuable estate, or you are just starting out in life and only have simple, modestly valued assets though, the assets you do own probably mean something to you. If you were to die unexpectedly without an estate plan in place, you would leave behind an intestate estate. That means the state intestate succession laws would determine what happens to those assets. Family heirlooms might be given to someone who would not cherish them as you have. Promises to friends and extended family members would not be honored. You even forfeit the right to decide who handles the administration of your estate if you die intestate.
Protecting You’re Your Most Valuable Assets
The need for estate planning is often discussed in financial terms. For many people, however, their most valuable assets cannot be valued in terms of money. That’s because their children are their most valuable assets. Becoming a parent changes just about every aspect of your life. If you are the parent of minor children, you undoubtedly want to protect and provide for your children, both while you are here and in the event you are not here. Your estate plan is the best way to achieve those goals. For instance, because your minor children cannot inherit directly from your estate, you will probably want to create a trust to guard your children’s inheritance. Your Last Will and Testament also provides the only opportunity you will have to officially nominate a Guardian for your minor child in the event one is ever needed. For many people, knowing that their children will be raised by someone f their own choosing, should it become necessary, is incentive enough to get started with an estate plan.
Addressing the Possibility of Incapacity
While planning for your eventual death and the distribution of your estate assets is an important part of estate planning, it is certainly not the only important reason to create an estate plan. In fact, planning for the possibility of your own incapacity is equally important. You may be surprised to learn that you stand about a one in five chance of suffering a period of incapacity lasting five months or more before you reach retirement age. The odds of becoming incapacitated will also increase as you age, making an incapacity planning component within your estate plan a crucial addition. Without one, you have no control over who will make health care decisions for you nor who will take over control of your assets and finances in the event you do become incapacitated. For most people, the thought of a court making those decisions doesn’t sit well. Moreover, if you fail to plan ahead, your loved ones may be forced to battle it out in court for the right to make decisions for you and/or control your assets if incapacity does strike at some point in the future.
Please download our FREE estate planning checklist. If you have additional questions or concerns about estate planning, or you are ready to get started on your plan, contact us at the Northern California Center for Estate Planning & Elder Law by calling (916)-437-3500 or by filling out our online contact form.