A lot of clients ask me, "Rob, do I really have to bother with this?" I tell them they do not have to do anything. You do not have to go to the dentist, you do not have to go to the doctor, you do not have to brush your teeth. You can do whatever you want, and you do not have to do estate planning.
Why people do it anyway
If you want to control who receives your assets after you pass away, and you want to reduce legal fees and potential taxes, you might want to consider estate planning. It also matters if you are incapacitated. If something happens to you, such as a coma, an aneurysm, Alzheimer's disease, dementia or a car accident, estate planning lets you control your assets even then. You also keep control over medical decisions. The question is how to make sure everything is protected if something happens to you, whether it is incapacity or death.
"I don't have enough money"
Some people tell me they do not have enough money to do estate planning. I always tell them the less you have, the more you have to lose. A millionaire who loses one of his millions will probably be okay. Most people have several thousand dollars in the bank, or maybe hundreds of thousands and some real estate. If they lose a large part of that, it is a pinch for the family. Very wealthy people can afford to lose something, but most people cannot. Why lose it if you can protect it?
Reasons that have nothing to do with money
There are also reasons that have more to do with intangible things than with who gets what. One example I use is the irresponsible ex-wife or ex-husband.
A client I will call Tim came to me after a divorce, and one of the reasons for the divorce was that his wife could not handle money. He asked whether he really had to do this. I told him that if he did nothing at all, remained unmarried and died, everything would go to his daughter. He said that was exactly what he wanted. I asked how old she was. She was 8.
I told him an 8-year-old cannot inherit real estate from him, and the insurance company is not going to write a check to an 8-year-old. It would write a check to her guardian. I asked who the guardian would be. He said, "Oh my goodness, it's my ex-wife."
So the insurance company would be writing a check to his ex-wife. He did not want it to work out that way. He created an estate plan that protected his estate from his ex-wife and made sure everything ultimately went to his daughter. That had very little to do with reducing legal fees and taxes, and it shows there are other reasons to create an estate plan.
Give your team the legal tools they need
People cannot act on your behalf and help you just because they are related to you. They need legal documents that empower them to do so.
I often compare an estate plan to a big toolbox. If you have a toolbox in your garage with a hammer, nails, a screwdriver and a wrench, you reach in and grab whatever you need to fix the problem. An estate plan is a legal toolbox.
It looks a little fancier and comes in a nice binder, but it holds the same kind of tools: a will, a living trust, powers of attorney, health care directives, marital property agreements, assignments of interests and a variety of others. The people you trust can reach in and grab whatever they need to address the situation.