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Estate Planning 101

Over the years, I have been asked to speak to groups about estate planning. Inevitably, the first things people are concerned about is how complicated the process is going to be, how much it will cost and will they really be able to understand the final product. I have always used the analogy of comparing estate plans to automobiles.

When you were young and single, you probably owned a used car or an inexpensive new car. Basically, you didn’t have much money so you couldn’t afford an expensive car. More than likely your only asset, in addition to the car, would be a checking or savings account. You probably didn’t own any real estate or have a stock portfolio. At that time in your life, you probably didn’t need a complex estate plan. In all likelihood a simple will leaving everything to your parents or siblings would suffice.

When you were newly married, the situation didn’t change much at first. You still didn’t have much money, but you wanted to make sure your spouse was taken care of. But then, maybe you bought a house or at least you started saving some money and probably bought some life insurance. At this point, again, your estate plan was still fairly basic, just like your car. You wanted to take care of your spouse if he or she survived you and if not, you would leave the rest to your parents or siblings. In those cases, we prepared what we refer to as “I love you” wills which left everything to the surviving spouse

Once children come along, you need a bigger car, maybe a minivan or SUV. At this point your estate plan becomes more complicated. More than likely, you would want to set up a trust so that your estate can take care of your children in the event you and your spouse die before your children are adults. This would involve appointing a trustee to oversee your assets and making sure your children are taken care of. You would also want to appoint a guardian who is someone who would raise your children if you weren’t around to do it yourself.

As you reach the “empty nester” point in your life, your needs for estate planning change again. Your children are grown and you don’t need a guardian for them. You may not even need a trust any more. But if you own a business, have accumulated some net worth, drive a luxury car, or own a second home, you have estate planning issues that need to be addressed. You may even have an estate tax problem. At this time, your estate plan gets even more complicated.

As you can see, your estate planning needs change as your circumstances change. Just like your car, your estate plan needs routine maintenance. You need to know what will happen to your assets if you don’t have a will or what happens to your estate when there is a second marriage with children from the previous one. You need to know what the rights of the surviving spouse are. It is not just the size of the estate that makes the planning complicated. Minor children, real estate in other jurisdictions, family members with illness and a host of other issues may require special consideration in estate planning.

Most people should have a will. Some may not need one. But you will not know what is best for you unless you consult with an estate planner. Fortunately, here at Inman & Strickler, we have several attorneys who are well versed in estate planning. As you may or may not know, the laws were changed this year. So, if you have not had your wills reviewed lately, it is probably time to do so. Give us a call and let us help you.