Who Really Needs An Estate Plan?

The answer and the reasons are not what you probably think, mainly because there is a misconception by many that estate planning is about death and transferring property when we die.  It does involve some of that, but it is much, much more.

A good estate plan helps you to organize your life around the things that are the most important to you.  It is about protecting your assets, providing security for your family and helping you to accumulate wealth toward your retirement. It is about providing for your children when they are young and beyond, providing for you and your spouse during health, in retirement, and through any years that you may need care.  Those are things we all need, even if we don’t yet have a lot of property.

So the answer to the Question of “Who Really Needs An Estate Plan?” is Everyone!

Wills.  A simple estate plan might involve just a Will.  A Will is a legal document that tells those you leave behind who you want to take care of your children, who you want to be your conservator if you become unable to take care of yourself and who you want to receive your property on death.

Probate.  In general most people know that Probate is public and expensive, and something to be avoided.  Many have the misconception that if they have a Will, they can avoid probate.  That is not true. In fact, a Will only becomes effective on death and it has to be probated to be effective.  So if a will doesn’t avoid probate, what does?

Trusts. A Trust avoids probate so long as it is funded. While a Will is only effective on death, most Trusts are effective when they are set up and funded.  They are effective now, and if properly established can avoid probate. But even Trusts have their problems.  One of the biggest mistakes I see with Trusts is that they are often not funded, and a trust is only effective for property that is in the Trust.

The lesson to take from this is that a Trust and the estate plan that it is a part of are not static; they are in fact dynamic and should be monitored annually to make sure that all the property they are to control is placed in them and also to make sure that there have not been any changes in the lives of the Trustors (the ones who set up the trust).  Since a good plan aligns with the family needs, goals, and objectives, it must be adjusted as the goals and objectives of the family change and as laws change.

Trusts are workhorses.  They manage not only the property of the Trustors, but they designate who is going to be on your “team” if anything happens to you.  For example, statistically if you are a 40 year old male, the risk of a disability of 90 or more days before you turn 65 is 43%.[i]  Such disability may also include a loss of capacity, or the ability to make decisions on your own behalf.  Having a clear set of instructions in place in the event that happens and having someone to immediately step in and take over until you recover, is very important.  A revocable living Trust can do just that.


An estate plan includes a whole list of documents, some of the most important of which are your health related documents.  Where a Trust governs who makes property decisions for you in the event you are unable to do so for yourself, you must have an Advanced Health Care Directive (California) or a medical power of attorney and HIPPA waivers to appoint a medical agent to direct your treatment and care if you are not able to do so yourself.


Those are just some of the basic elements in a foundational estate plan.  Beyond the basics there are many more advanced issues involving minimizing transfer and income taxes, charitable planning and gifting, private foundations, family business structures, and assuring that the legacy of your life (including your property, your values, your beliefs, etc.) are preserved and passed on to your chosen heirs.

[i] Statistics Provided by New York Life; www.newyorklife.com.

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