Many people incorrectly assume they don’t need an estate plan because they’re not wealthy. This misconception may stem from weirdness in the English language. Although estates are often associated with wealth, estate plans are for everyone, and you need an estate plan even if you’re not rich.
What Does Estate Mean?
When you think of the word “estate,” what comes to mind? A mansion surrounded by pools and topiary? A privately owned vineyard with multiple buildings? A huge ranch with a sprawling house and lots of horses?
Although “estate” can mean an expansive property associated with wealth, it can also mean whatever belongings a person leaves behind when they die, and this is the definition that’s relevant when discussing estate planning. Your estate doesn’t have to be worth millions. It consists of all of your assets, including real estate and personal property, as well as your debts. It has both financial and emotional value, and even if it is modest, it deserves planning.
Many People Leave Larger Estates Than They Realize
Even if you’re not wealthy, you may have much more than you realize. Take a moment to think about all of your assets, including your:
- House and other real estate
- Car and any other vehicles or boats
- Clothes, jewelry, art, and collectibles
- Keepsakes and family heirlooms
- Retirement plans, investments and savings accounts
- Intellectual property, such as art or writing you’ve created
Once you sit down and tally everything, you may realize that you have much more than you thought. You may also want certain items to go to certain people once you’re gone. If you don’t have a solid estate plan in place, there’s no guarantee that your wishes will be known or followed.
Estate Planning Protects Your Legacy
Unexpected taxes and family disputes can taint a person’s legacy. Estate planning can protect your legacy against these issues.
The Oregon estate tax applies to estates as small as $1 million. That may seem like a lot of money, but when you realize that it can include your house, vehicle, and retirement savings, it’s easy to reach that threshold without being considered wealthy.
Let’s say you want to leave your house to your adult child. The house has significant financial value, but it also has emotional value, and you want it to stay in your family. However, your estate meets the $1 million threshold, so Oregon estate taxes are due. Your estate also has some debts. If the estate lacks liquid assets, it may be necessary to sell the house to cover the taxes and debts owed. With proper estate planning, another option may have been available.
Family disputes are also common. Imagine you don’t want to leave your house to one child. You want to leave it to three children to share. However, two of your children want to sell it. The third child wants to live in it, but does not have enough money to buy out the siblings’ shares. This sort of situation can lead to ugly disputes that thoughtful estate planning might have been able to prevent.
There’s More to Estate Planning Than Your Estate
An estate plan lets you control end-of-life decisions, and that includes more than what happens to your assets. Incapacity planning goes hand in hand with estate planning, and it’s important for all adults regardless of wealth.
Consider what would happen if you were incapacitated and couldn’t make medical decisions for yourself. Would you want to stay on life support indefinitely? Would your family know what you wanted?
An advance directive lets you make your wishes clear. With a living will, you can outline what you want in terms of your care, and with a medical power of attorney, you can choose a person to make decisions on your behalf. This is an important part of estate planning that people often overlook when they focus on wealth.
Do You Have an Estate Plan?
Estate plans aren’t just for the rich. If you’re an adult, you can benefit from an estate plan that outlines your wishes for your assets, prevents issues with unexpected taxes or family disputes and states your wishes in the event of incapacitation. An estate planning attorney can guide you through the process.
Are you ready to get started on your estate plan? Contact Skinner Law.