We hear all the time, “I am too young to put a plan in place;” or, “I don’t have enough to worry about planning.” However, both those statements misconstrue what estate planning actually is.
First, you need to know that you, in fact, do have an estate. It may be a large estate or a small estate, but your estate is what you own, and who you care about. Google “everyone has an estate” and see the pages and pages of results. You can read my prior blog here; or if you want to hear me talk about, I did a video here.
Planning for your estate, then, is simply the thought process that leads to memorializing your wishes. This will help mitigate problems for you and your loved ones. Even if you’ve not engaged in this process, you have an estate plan. Your State of residence has generously provided you a plan via their laws and their court system. And we know that the State’s plan is always the perfect fit for your situation (note the sarcasm).
So, are you too young to plan? The answer is: “No.” Once you’re an adult (age 18), you should have, at minimum, a Financial Power of Attorney, Health Care Power of Attorney, Living Will and an Authorization to Disclose Health Information (aka “HIPAA”). For all you parents and grandparents: as your 18 year-old son or daughter heads off to college this fall, it is important they have these minimum planning documents in place.
As you acquire more assets and/or start a family, other documents become necessary to mitigate future issues. Estate planning is about peace of mind. You are never too young to plan. If you care about anyone, you put a plan in place.
So, when do you have enough money to plan? If your goal is make things easier for those who need to care for you, then it really does not matter how much money you have – you need a plan. The type of plan will vary with the size of your portfolio (Bill Gates will have a much more complex plan than you or I), but planning is the grant of power and the direction on what is to be done with whatever assets you may have. A proper plan also deals with incapacity (e.g. if you were to end up in a coma).
We have seen many poorly planned estates (or no plan at all) have to give up the $1,000 property because the cost to “get” the property out of the estate was more than the property was worth. That is a terrible conversation to have with the family of the person who has passed.
It is important for everyone to have an estate plan. The size and complexity of the plan will vary with each person’s circumstances. Sitting down with one of our estate planning attorneys to go through your situation will help you put in place the best plan for you.
Contributed by Morris Hall, PLLC Estate Planning Attorney and partner, James P. Plitz.