People often assume that an estate plan is only necessary for those with a certain level of net worth. The reality, however, is always everyone needs an estate plan, regardless of the value of the assets. There are so many reasons to establish an estate plan, none of which have any relevance to the value of your estate. Below are four good reasons:
1. To name guardians for minor children. Admittedly, there is no one better to raise your children than you. But if the unthinkable happens and you are not around to do the job, the next best thing is for you to choose who will take on the responsibility of raising your children. And if you know that there is someone you do not want raising your children, then it becomes even more important for you to express your choice of guardian. If you haven't committed your choice of guardian in a legally valid document, then a judge in the county probate court will decide who is best to raise your children without your input.
2. To avoid the cost, time, and public nature of a probate action in the county court. If you do not decide now how you would like to transfer your assets, then the probate court will be involved in distributing your assets. Almost everything that takes place in probate court is a matter of public record and anyone can see who will receive what. Additionally, the fees due to the lawyer and the representative of your estate are established by statute and are calculated on a percentage of the GROSS value of your estate (regardless of the amount of any debt).
3. To direct the disposition of your assets to your beneficiaries upon your death. With careful estate planning, you can direct your beneficiaries' use of your assets long after your death. You can include conditions relating to the completion of education, require a certain level responsibility, or simply hold assets until a time you decide is best for distribution. If you are married and are the first spouse to die, you can be sure to structure your plan so that your assets are held for your beneficiaries and will not be redirected to others, such as a second spouse.
4. To plan for the possibility of incapacity. Your estate plan should include planning for the management and distribution of your assets not only at your death, but also upon your incapacity. If you are unable to make your own financial, medical, and/or other personal decisions, it is best to have people named to take your place in making such decisions. If you do not, the court will name someone for you and the circumstances and details of your assets and incapacity become public record.