By: Megan Gebhardt
Estimated reading time: 3 minutes
Do you Need an Estate Plan? Probably, and not just because default rules about what happens to your assets and minor children will apply if you don’t have a plan in place. Interestingly, surveys show that over 60% of American adults do not have an estate plan in place. The most common reason for not having a will was that the person had not gotten around to it. With that in mind, starting the conversation about why you should get around to putting an estate plan into place may nudge you closer to beginning the process.
First, what does an estate plan do? An estate plan is a way of implementing your wishes around your legacy, ensuring that your goals and values are enacted through the instructions you put in place in your legal documents. In more concrete terms, this can look like directing where your assets will go when you die, who you will nominate to be the guardian of any minor children, and naming people to be in charge of taking care of the financial well-being of your children as they grow. Aside from just the “what happens when I die” part of planning, you can also make critical decisions about end-of-life wishes and nominate someone to take care of your financial and medical decision-making if you are incapacitated.
So, do you need one? People that would benefit from an estate plan include:
- Anyone who wants to control what happens to their assets when they pass away, designating the assets to specific individuals or charity, etc.
- People who want control over who would manage their affairs for them if they become temporarily or permanently incapacitated.
- Parents with minor children.
- Parents and families who want to control how the beneficiary can use the money they are leaving behind. For example, leaving money in a trust that can be used only to provide for education.
- People who have moved to Washington state from a different state with a different set of probate and estate tax rules.
- Individuals with assets that exceed the Washington State estate tax exemption amount and/or the Federal estate tax exemption amount.
What makes up an estate plan? In Washington, an estate plan typically consists of three essential legal documents:
- A Will or Trust
- Health Care Directive
- A Durable Power of Attorney for medical and financial decisions
These documents serve to implement your wishes and range from basic to complex – dealing with tax minimization, trust structures, and contingency planning.
In addition to these essentials, there are also other tasks you can take on to ensure your wishes will be carried out as you’d intended. These could include:
- Conversations with loved ones about ongoing care at the end of life.
- Speaking with the individuals nominated as guardians of your minor children in your will to ensure that they know your parenting values, wishes, and dreams for your children.
- Ensuring that you have assets through savings and life insurance to adequately protect your spouse/partner/children if you were to pass away in the near future.
- Setting up a Donor Advised Fund to allow for tax-efficient charitable intent under current law.
- Creating an inventory of assets that could be used to identify what assets you have and where/how to access those assets (e.g., online accounts, insurance policies, etc.).
- Determine whether your social media accounts should turn into legacy accounts, be deleted, or left as-is.
Estate planning can be very approachable, both from a time and cost perspective, and doesn’t necessarily require ongoing maintenance. Consider it a task that you can complete that will result in a set of documents that you can check back in on every so often.