Recently, I've seen a lot of curious looks on my younger clients faces when I ask them if they have done any estate planning. There seems to be this reaction like, “why would we need that, we're not rich.” When some folks hear the term estate planning, they seem to envision mansions and grey hair and don't consider that it's something they need. There simply isn't the awareness out there as to how critical estate planning can be.
Bryan Phipps, Trusts and Estates Attorney with Forethought Law, PC in El Dorado Hills, shared some of his insight as to some of the benefits of estate planning for those just starting out and younger families. Bryan explained that he's often asked “when is the right time to start estate planning?” His response is usually, “before you need it.” While most of us don't want to think about the unfortunate events that estate planning is designed to address, those that take the steps to be prepared will likely sleep a little better at night. Bryan shared three life events or stages that can trigger the need for an estate plan.
Parents with young children:
Making sure the needs of the children are met if something happens to the parents while the children are minors is very important. Here, most estate plans provide for one or more trusts to take care of the minors’ finances and a nomination of a guardian to handle the minors’ personal affairs. These include issues like where the children will live and go to school and healthcare decisions. While the appointment of the nominee as the guardian is ultimately up to a court to decide, the parents’ nominee is given preference over others and can help give surviving family members some much-needed insight into the wishes of the parents.
Young, single adults who still rely on parents financial support:
Young adults who still rely on Mom and Dad for their health insurance, tuition, rent, and spending money—i.e., pretty much any college student—will benefit from an Advance Health Care Directive and Durable Power of Attorney Finances, which will enable Mom and Dad to coordinate their student’s health care and assist with banking activities.
Purchase of a home:
In California, if the gross value of your estate is more than $150,000, the estate will have to go through the expensive and drawn-out probate process before it can be passed on to the next generation. Since essentially every home in California has a gross value over $150,000, establishing a revocable living trust (and funding it with the home and other appropriate assets) will allow the estate to pass to the intended beneficiaries without the need for probate.
So whether you are a young college student, new parent, or first-time home buyer (or, of course, nearing retirement), it is a good idea to talk to an estate planning attorney about how a comprehensive estate plan can benefit you now. Check out one of Bryan's recent articles on Inherited IRAs or visit his profile on LinkedIn for more information. Also, please note that none of the information contained in this post should be considered legal advice. Before making any decisions related to your own legal affairs, be sure to consult an attorney.
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Your guide to 2020 tax rates, retirement contributions, and Social Security.