A common misconception is that estate plans are only for people with sizeable estates, multiple houses and valuable assets. While they will require more help creating a comprehensive estate plan due to the complexities of their estate, they are not the only ones who should have one in place. Every person of legal age can make an estate plan and update it regularly as they age and accumulate wealth. But why is estate planning so important?
An estate plan will protect your loved ones
The probate process can take years to finalize, and the filing fees can be steep. Everything you own will be subject to the California probate process if you do not use estate planning tools to transfer them to your loved ones when you die. Your estate plan can help your family avoid probate and set up insurance policies to protect them from unnecessary financial burdens. It can even minimize estate taxes.
An estate plan will protect you
Once you are legally an adult, you can make significant decisions for yourself, including those concerning your health and finances. It is always best to plan for when you do not have the mental or physical capacity to act and think for yourself due to illness or injury. You can establish a power of attorney and name someone to act on your behalf. The person you give a power of attorney will decide for you, so you should choose someone you trust will carry out your wishes in good faith and with your best interests in mind.
An estate plan can be as simple as creating a will to outline any advanced health care directives you may have, but often, that is not enough. A will is subject to probate. As your estate grows, so should your estate plan evolve. You can actively review and update your estate plan at every life stage and milestone.