Estate Planning for Families: Not Just for the 1%
Common Reason #1: I do not have enough money to be concerned about estate planning.
The reality is that just about everyone needs an estate plan.* State law provides a contingency plan in case you die without a will (“intestate”), but there is no backup plan if you become incapacitated and unable to manage your financial or health care decisions.
Scenario No. 1: If you do not authorize someone to make healthcare decisions when you are incapacitated, and your belief system differs with your close family members, they may end up making health care decisions for you that go against your wishes.
Scenario No. 2: In the absence of a Durable Power of Attorney, your financial resources may not be available to provide for your care. In this case, someone will need to initiate a Conservator proceeding, which is a a court-supervised management of your assets that requires a lawyer and sometimes a professional fiduciary.
For parents with young children, it is especially important to have a will with a guardianship provision to designate the person(s) you wish to care for your children if you die while they are minors. Estate planning allows you to provide rules for how the money and property you will leave to any minor children will be administered and by whom.
Scenario No. 1: If you do not specify who should be the guardian of your children, in your will, the court will decide, and the court will likely choose among family members. This can create problems if you would rather have a friend serve as guardian or if more than one member of your family and/or your spouse’s family would like to serve as guardian. Court battles over guardianship could be quite painful for your children.
Scenario No. 2: If your child, as a minor, inherits property outright, it will become subject to a guardianship. Guardianships are court supervised, which requires annual reporting as well as additional costs in court and attorney fees. Further, legal guardianship imposes rigid restrictions on how the money can be spent for the minor’s benefit and may prevent use of the funds if someone who is still living has a legal obligation to support the minor.
* This material is for your general educational information and is not intended as legal advice. Readers are responsible for obtaining legal advice applicable to their specific situations from their own legal counsel.