Whether you realize it or not, you need an estate plan. Unfortunately, many people labor under the misconception that estate plans are only for the rich. If you think you are too young or “too poor” to need an estate plan, think again.
Regardless of your age, your marital status or your perceived wealth, you are important both as an individual and to your family. This is especially true if you are a parent. Without an estate plan, you provide for none of these people, including yourself.
Last Will and Testament
For most people, their will serves as their estate plan’s foundation document. Why? Because if you die without having made one, California law determines who will inherit from you and in what proportion. This intestacy distribution may have nothing to do with what you would have preferred. Consequently, the only way you can control the distribution of your assets is by naming your heirs in your will and what you want each one to receive.
Your will can serve other important functions as well. For instance, if you are a parent of young children, you can specify in your will the person or people you want to rear your children in the event you and your spouse die in an auto accident or other catastrophic event.
Trusts
You may also wish to consider establishing one or more trusts as part of your estate plan. Here you have many choices, including the following:
- A special needs trust to benefit your special needs child
- One or more revocable trusts to benefit you during your lifetime and then, at your death, pass its assets to its other beneficiaries without having to go through probate
- An irrevocable trust to reduce your estate tax burden
- A charitable trust to benefit the charity or nonprofit organization of your choice
- An insurance trust funded by one or more of your life insurance policies
Remember, you can change the terms of your will and any of your revocable trusts any time in the future you need to. Your wisest strategy consists of updating your estate plan any time you experience a life change such as marriage, divorce, new parenthood, etc.
