So, Who Needs An Estate Plan, Anyway?
Tuesday, August 3, 2010
As an estate planning attorney, I would love to say that absolutely everyone needs an estate plan. That, of course, is not true. There are plenty of people for whom simple wills or the default rules of intestacy will work just fine.
Wealth is not the sole determining factor as to who should have an estate plan. Tax avoidance is a good reason to have an estate plan, but it's hardly the only one.
The corollary to that, however, is that there are plenty of people who really should have an estate plan in place, and simply don't recognize the potential pitfalls of not having one.
Wealth is not the sole determining factor in deciding whether or not to have an estate plan. Tax avoidance is a good reason to have an estate plan, but it's hardly the only one. Parents with young children needs to think about what will happen to their children if they die. While intestacy laws will make sure any wealth is passed to the children, those laws cannot respect parents' wishes with regard to guardianship, nor can they establish a rational financial plan for whatever is passed to the children.
A good estate plan for couples of moderate means with minor children can ensure that they grow up under the guardians of the parent's choosing, not the court's. Also, the plan can include testamentary trusts, so that any assets left to minor children can be properly handled. Leaving young children some assets to pay for living and educational expenses is great, but granting them unfettered access to those funds isn't. They'll need some guidance and impulse control, which is exactly what a well-constructed trust can provide.
Talk to an estate planning attorney to see if you might need some help putting an emergency pan in place should the worst happen.