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What does the election of Donald J. Trump have to do with your estate plan? According to a recent national survey conducted by Wealth Counsel, Inc.,in fact, nearly half of all respondents believed that estate planning is only for the super-rich and most people don’t need it. This misperception causes families to:
· Not have a named guardian in place
· Direct your homes, bank accounts, and other assets to unintended beneficiaries
· Leave you at the court’s mercy when you lose capacity
It’s not surprising that people make this mistake when much of the material from the estate planning world has focused on a dizzying array of techniques and solutions for those with large estates.
For the rest of us, what is important to know about estate planning?
1. You Don’t Have To Be Rich to Face Conservatorship If You Become Incapacitated
The rule is pretty simple – someone has to be in charge at all times. If you are alive and well, you make your own legal, financial, and medical decisions. If you are alive and incapacitated your agent under a Power of Attorney can make legal and financial decisions on your behalf, and your agent with an Advance Health Care Directive can make health care decisions. If you don’t have any of those documents, then your family will have to try to get a court order appointing someone as your conservator.
2. You Don’t Have to be Rich to Have Family Conflict
We hear about conflicts in the estates of stars like Prince, or Robin Williams. The reality is that those types of conflicts happen every day to ordinary families too. When you add the complicated family relationships that many families have, the potential for conflict even higher. Are these fights only about the money? Or is there something even more important that leads to fighting? What leads kids to spend any amount of money and never speak to their siblings again? Greed and sibling rivalry can’t explain all the conflict. Often the root of the conflict is differing opinions as to what mom and dad would have wanted. When you leave no clear instructions, when you don’t create your own “rule book” for your children, family conflict can be the result.
3. You Don’t Have to Be Rich to Save Money by Planning Now
One of the biggest expenses an estate faces in California is probate. The court process of transferring your assets at death to your beneficiaries takes months, costs thousands, possibly tens of thousands, depending on the size of your estate, and exposes all of your financial information to the public. Any estate larger than $150,000 has to go through the probate process to transfer the assets. And a will doesn’t avoid probate, in fact, a will has to go through probate. That is the advantage of a properly designed and funded trust – trusts avoid probate.