“When I have an estate I’ll make sure to do some estate planning”. I hear statements similar to this ALL THE TIME! What people should be asking is “When To Get an Estate Plan?”

So, what’s going on here? Well first, I think some people misunderstand what estate planning is and who needs it. The fact that a lot of people seem to think that they need an “estate” before they do estate planning is a big clue.

What is an Estate?

I think some people assume that an estate is some sort of grand or extravagant level of wealth and assets. It actually has nothing to do with the value or type of your assets. Your estate in simple terms refers essentially your assets, whatever they may be. And that’s good enough for this discussion. I won’t go into other terms like “probate estate” or “taxable estate” which are beyond this discussion. What’s important at the basic level is that even if you’re net worth isn’t in the gazillions and you don’t have a private yacht in Monte Carlo and chateau in France, you still have an estate. And it’s important to plan.

Who Needs an Estate Plan?

This is simple. YOU need an estate plan. Pretty much everyone does. It’s fairly obvious that the gazillionairs need estate planning, but why isn’t it as obvious that everyone else needs it to? Again, it has less to do with the value of your assets and more to do with planning with those assets. And it’s even more important than that. That’s right, estate planning isn’t just about your assets and deciding who gets what when you die (and I’m sorry to be the one to break it to you, but someday you will die).

Proper estate planning does all of the following and more:

  1. Lifetime Incapacity Planning – Making sure that you appoint people to make your medical and financial decisions for you if you can’t for yourself. And doing so smoothly without needing to go through any court proceedings.
  2. Guardianship for Minor Children You can choose who you want to be guardians for your children so they don’t have to be in foster care while they wait for a guardian to be appointed by a court (who may or may not be who you think is best).
  3. Avoid Probate Probate is the court supervised process to transfer assets upon your death. If you plan ahead, you can avoid this time consuming, public, and often expensive and sometimes contentious process.
  4. Define Your Inheritance Plan – You can make sure that your kids don’t get too much too soon etc. and that someone can use the funds responsibly for your young children until they’re old enough.

When Should You Get an Estate Plan?

More likely than not, right now is the right time to get an estate plan put together. Imagine the young married couple with a new baby. They may not have a lot of wealth. Maybe they have almost no assets. They’re renting an apartment and all they have is a life insurance policy through their employer.

It’s worth having a foundational estate plan with a revocable trust to hold the life insurance proceeds for their child if something happened to them. This may be your situation. Or, you may already own real estate, have a retirement account, own a business, have several children, have special needs children, have a large net worth, or have charitable aspirations. Whatever your situation, you can plan for it. Your peace of mind is key.

Recently two people who I knew growing up passed away unexpectedly (unrelated to each other). Neither had any estate planning. One was in this 30’s with a beautiful wife and several beautiful young children. He unfortunately didn’t even have life insurance to provide financial security for his spouse and young children. The other was about 50 and was unmarried with no children. The families of both are facing administrative challenges with probate etc. to sort out everything in the middle of an extremely emotional time in their life. It hurts my heart because I love both families and because I know they could have avoided the stress and complexity they are facing with some planning.

Make Things Easier

In his book, “The One Thing,” Gary Keller repeats like a mantra “What’s the ONE Thing you can do such that by doing it everything else will be easier or unnecessary? Estate planning is one thing that will make things easier or unnecessary. So, whether you have millions of dollars, or hardly any assets, it’s still important to plan. It’s not too early to do your estate planning. Make sure you do it before it’s too late.

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