Many years ago, a neighbor’s teenaged daughter asked me what type of law I practiced. When I told her I focused on estate planning, she looked at me bewildered. “You mean, like mansions?” she asked. It was clear she was envisioning something like the image above.
She’s not the only one confused. I once got an email from someone inquiring about a Will. She listed all her assets, which included vehicles, bank accounts, and retirement accounts and added that “the only estate…is a very small lot” which was deeded to her.
Lawyers use the term “estate planning” assuming that everyone knows what we’re talking about; however, many non-lawyers hearing the term think of an estate as simply land or property. They assume that if they are not homeowners or their home is not worth very much, estate planning might not be something they need.
That couldn’t be farther from the truth.
An estate consists of more than houses. It includes property such as:
- real estate, including your home, rental properties or undeveloped lots
- vehicles, such as cars, boats, airplanes
- closely held business interests
- bank accounts, including checking, savings, money market and CDs
- investment accounts such as mutual funds
- stocks and bonds
- money owed to you at the time of your death, such as loans you’ve made, wages and bonuses or commissions
- personal property, such as furniture, clothing, jewelry, antiques, silverware, china, art and books.
- retirement accounts, such as IRAs, 401(k)s, and annuities
- death benefits from life insurance policies
If you have any of the items listed above, you have an estate for which you need to plan. Why? Because planning puts you in control of what will happen to your property if you become incapacitated or die.
If you don’t plan for your incapacity, it may be necessary for a court to appoint a guardian to manage your affairs while you’re incapacitated. Guardianship is often expensive and cumbersome and can be avoided with a durable power of attorney.
If you don’t have a Will specifying what should happen to your property when you die, your belongings will be distributed according to a statutory formula that does not take into account your wishes and unique circumstances.
If you want control over who should manage your affairs if you become incapacitated and how your assets will be distributed when you die, you need estate planning.