Business Succession, Definitions, Disability Insurance, Estate Planning, Guardianship, Legacy, Life Insurance, Medical Power of Attorney, Power of Attorney, Probate, Real Estate, Trusts, Wealth, Will Contests, Wills

Attorney Confessions: When Do You Actually NEED an Estate Plan?

So, let’s be honest.

Is estate planning really that necessary?

I mean, you probably know a ton of people in your life who do not have estate plans. And their lives seem to move along just fine.

So when are the times that one does not need an estate plan?

Well, let’s first look at the definition of what is an “estate plan.”

An estate plan is a legal plan set in place by a series of documents that address different possible scenarios in the future.

More specifically, I like to split these documents up in two categories: pre-death and post-death documents.

Pre-death documents apply to you while you’re still alive. These are your financial and medical powers of attorney, your advance healthcare directive, HIPAA release forms and guardianship designations.

I would argue that literally everyone, regardless of circumstance, would benefit from having pre-death documents.

The only person who does not need to worry about pre-death documents are people who have given the right to guardianship to another, such as the mentally handicapped, prisoners, children, medically dependent adults, etc.

Other than that, powers of attorney and the other medical documents I mentioned will protect you in case an emergency pops up in your life and prevents you from communicating what you would like to have happen.

The other type of documents you would have in a solid estate plan is what I call post-death documents. These are your wills, trusts, beneficiary designations, ladybird deeds, etc.

Concerning post-death documents, you might actually be surprised to hear that you needs these documents most of time. Not all the time.

Specifically, I believe you need post-death documents if you own real estate inside or outside of Texas, have children, want to give your assets to someone other than your children, or have specific ways you want to give away your assets.

Now, I will admit, this is going to cover most people. Meaning that most people should have post-death documents.

But there are instances where you could have only bank accounts, retirement accounts, and/or investment accounts with beneficiary designations already in place that would give your assets to whomever you direct upon your death. Also, if you only have accounts that are jointly held with your spouse and loved ones.

But, in these circumstances, you would have to make sure that your paperwork is in order, and you must keep it up to date to make sure your accounts go where you want.

So, it is possible that you do not need post-death documents, and you’ll be just fine.

But, to be quite frank, most people are going to need post-death and pre-death documents if they want to cause the least trouble and keep things as cheap as possible for their loved ones.