For young families who are barely meeting their expenses, estate planning can seem unnecessary. Why, they wonder, should they make plans for their estate when it doesn't seem like they have much anyway? And no parent wants to think about not being around to look out for their children.
But these are exactly the reasons why it's so important for every family, no matter their income or assets, to have some type of estate plan, even if it seems like they don't have much of an estate to consider.
Many people assume that estate planning is only for wealthy families. But estate planning is not about the value of what you own, but the way you value what you have. Not planning for what should happen in your absence can result in chaos for the people you leave behind. Basic estate planning doesn't have to be costly or particularly time-consuming, but it does require a bit of careful thought.
Make a Plan for Your Children
First things first, what will happen to your kids? This is a primary concern for most parents. If something happens to either or both parents, who will raise their children? How will their children's needs be provided for? Make a list of the people in your family that you want to look out for your children. Are there other family members who want to be sure are provided for –your spouse or partner or other family members? If you have a special needs child, you'll want to specifically consider that child's needs into adulthood. Now consider what assets you have that you can allocate for your loved ones.
Consider Your Assets
Though your checking account balance may lead you to believe that you don't have enough to justify estate planning, once you start looking around, you might be surprised by all the tangible and intangible assets you have.
Your tangible assets may include:
Homes, land or other real estate
Vehicles including cars, motorcycles or boats
Collectibles such as coins, art, antiques or trading cards
Other personal possessions
Your intangible assets may include:
Checking and savings accounts and certificates of deposit
Stocks, bonds and mutual funds
Life insurance policies
Retirement accounts, such as workplace 401(k) plans and individual retirement accounts
Health savings accounts
Ownership in a business
Once you know all your tangible and intangible assets, you need to estimate their value using appraisals and financial account statements. If you aren't sure of an asset's value, value them by estimating how you think your heirs will value them.
All of these assets combined comprise your estate. In California, if the value of your estate is less than $166,250, you can write a simple California Basic Will. If your estate is worth more than $166,250, probate will be mandated by law and a Basic Will may not be sufficient or the best option.
In addition to assigning guardianship for your children, you will also want to address issues such as a health care directive and assigning power of attorney to someone you trust to make health care decisions for you, should you become incapacitated. The State of California provides free online forms that you can complete to help you make your intentions known.
Using the free resources that are available is the bare minimum any parent should do to be certain their children will be cared for in their absence. However, if you own more than $166,250 worth of assets, if you have family members you want to make sure are provided for in your absence, and if you want to be certain that your wishes for yourself are followed if you are unable to express them, there is no substitute for working with an attorney who understands these issues and can guide you through this process.
Lawyers at Davidson Estate Law can help you work through these and other concerns. Contact us today.