Oftentimes, when people hear the term “estate planning,” they assume they need to be old or rich (or both) before estate planning really matters. This could not be further from the truth. Anyone and everyone are vulnerable without proper planning, particularly when an unanticipated event or tragedy occurs. The good news is that with just a little bit of preparation and relatively small expense, people from all demographics can protect themselves and their families. With advance planning to ensure your estate is in order and your children have someone to raise them and pay for their needs, it is easy to avoid tricky legal situations that could result in a much greater expense. As my colleague likes to say, “Let’s plan for the worst, and hope for the best.” Here are three exemplary scenarios that young people often overlook when contemplating whether or not they need to do some estate planning.
EVERYONE NEEDS DECISION MAKERS – Everyone age 18 and older needs to legally delegate decision makers in case of an emergency. Once you are an adult, you and only you may control your financial and health affairs, unless you properly delegate this authority to someone else in advance. The easiest and most thorough way to accomplish this is to execute durable powers of attorney for both financial management and healthcare decisions. This way, someone else can step into your shoes if you are alive, but unable to make decisions and take action yourself.
Durable powers of attorney are relatively simple and inexpensive to execute, and they are easy to use when the unexpected occurs. Without these documents, the only other way your loved ones can gain the authority to conduct your affairs is to obtain a guardianship, which can be expensive, involves the court and most importantly, can take many months before a guardian is appointed. This is time we may not have if bills need to be paid or medical decisions made. It is absolutely vital to get these particular documents in place ahead of time, even if you do no other estate planning.
PEOPLE WITH CHILDREN – Most parents would agree that their children are their most precious assets, and yet many do not have the proper protections in place should something unexpected happen to one or both parents. For parents with minor children, it is important to legally document who you would want to act as your children’s guardian should the need arise; further, how you would want your assets directed to most benefit your children, such as through a family trust. Who would make a great trustee for that trust?
Even for parents of young adult children who no longer need a guardian, it is important to provide similar direction on how assets should be distributed to that young adult, such as through a trust, since most people would not want a significant amount of assets going directly to an 18-year-old.
In addition, even your young adult children who are getting ready to head off to college or out into the world should have, at a minimum, durable powers of attorney so that you, as parents, can step into their shoes and help with decisions should they need assistance. Without having these proper protections in place, parents and children are vulnerable to the whims of the court, who then become the decision-makers for guardians and trusts. Proper estate planning is essential to help parents protect their family during what would be a difficult time.
PEOPLE WITH “MINIMAL” ASSETS – One of the most common sentiments we hear from prospective clients is that they do not think they need estate planning documents since they “do not have much” in their estate. Aside from the conversation of how important it is for everyone to designate decision makers in case of emergency, we remind people that it is also important to give direction to your assets, even something as small as a checking account, while they can. They may not have a lot of valuable assets at the time they are doing the planning, however, it is still important to give direction to the assets you do have. Providing advance direction while you are alive can save your loved ones a lot of time, money, hassle and stress to settle your estate during what will already be a difficult time coping with your loss.
There are lots of great legal tools that can be used to make distribution of even a minimal amount of assets easy and inexpensive, particularly if the probate process can be avoided. These documents not only provide specific direction and instructions, but they also tend to reduce or eliminate potential conflict since your loved ones will not have to make the difficult decisions about dividing your assets. We also remind clients that while they may not have a lot of assets at this exact moment in time, we never know what the future may bring. While it may seem somewhat far-fetched, should a person win a large legal settlement or the lottery (hey, we can all hope), there may be more assets available at the time of their death than they can contemplate in this moment.
Now let’s talk the cost part. Estate planning does not need to be an expensive endeavor. Of course, there are always those “legal” websites and programs from popular financial advice professionals (who are not attorneys) that we have all seen purporting to provide free or cheap estate planning forms. The main problem with these documents is that they are often not Washington-specific, nor are they guaranteed to address your particular situation.
Even if these Internet specials purport to be accurate, the critical piece missing is an analysis by an estate planning attorney as to your particular situation. You want to ensure that you have the proper documents, with language that clearly indicates your wishes for when you are no longer here to ask. You want to properly execute the documents so their validity is not in question. You want to ensure that the plan you have in place addresses your particular family’s needs. They are worth it, yes?
Estate planning attorneys are not all as expensive and inaccessible as many people think. Many estate planning attorneys will provide free consultations, a la carte documents or packages of documents, depending on your specific needs, reasonable flat fees and even payment plans if you cannot afford the total cost up front. Be sure to ask your attorney for what will make the process work for you.
The amount of stress and anxiety you will save your loved ones (and yourself) will be well worth every penny you spend on carefully planned and executed estate planning documents. Not only will your loved ones thank you, but more importantly, you will be sure you are protecting yourself and your family from unintended consequences. Estate planning is for everybody – even the young and their families.