A Quick Guide to Estate Planning in Your 20s, 30s and 40s
“Estate Planning is for old people.” – Everyone who hasn’t read this blog post.
“I need an Estate Plan.” – You when you finish reading this blog post.
Estate Planning should be the most popular area of law in the country. I should be driving a Mercedes instead of a Ford. Why? Because literally every single person in the state of Michigan needs some form of an Estate Plan. Unfortunately, for me, most of my potential clients are blissfully unaware of that fact. Most people assume that only the very wealthy and the near-dead need an Estate Plan. For the average Michigander in their thirties or forties, Estate Planning is the last thing on their minds. Most probably have more debt than assets at this point. They have student loans, a brand-new mortgage, and two or three beautiful (and extremely expensive) kids. Who needs an Estate Plan if they have no money? Also, people in their thirties and forties don’t die. Who needs an Estate Plan now when they are going to live another fifty years? The answer to both questions is: you do. You need an Estate Plan now to protect yourself, your spouse, and your kids.
How does an Estate Plan protect you now?
How does your Estate Plan protect your kids?
Second, the Estate Plan of any person with minor children should include nominations of Guardians for those minor children in the event both parents are incapacitated or die. The decision of who you would choose to raise your children in your absence is an incredibly difficult one to consider but also one of the most important. Let’s go back to our case study. If Emily and John do not survive, their Estate Plan clearly states that they wish for Emily’s parents to become the Guardians of their three kids. Her parents live right down the street, so the kids can continue to attend the same school. If Lisa and Scott do not survive, their families will be headed to court. Their parents will spend thousands on legal fees fighting over their grandchildren. Their two kids are left with grandparents who hate each other. In fact, Lisa and Scott would have preferred Scott’s sister, but she didn’t know that. Ceremoniously selecting a family member as a ‘Godparent’ has no legal significance. You need to appoint legal Guardians for your minor children now.
Third, having a (well-drafted) Estate Plan ensures that your assets will be used for your children’s benefit in your absence. I know, I know, you have no assets. Do you have life insurance? Probably. If not, you should think about buying a term policy. Let’s assume that John had a $500,000.00 life insurance policy. John has a Trust that appoints his parents to act as Trustees if Emily is also deceased. John’s parents are able to hold the proceeds of the life insurance policy in trust for the benefit of their minor grandchildren. The funds are eventually used to pay for their college educations. Lisa also has a $500,000.00 policy but no Trust. Under Michigan law, when a person’s spouse is also deceased, children are next in line to receive an inheritance. However, minor children cannot receive inheritances. Lisa’s parents end up in court petitioning to become Conservator for their grandchildren in order to manage the inheritance on their behalf. Those poor people are spending way too much time in court. When Lisa’s son Max turns 18, he is legally entitled to distribution of his inheritance. He is given a check for $200,000.00, which he promptly spends on a fancy car, a few trips to Cancun, and jewelry for his girlfriend. Oops, so much for college. You need a Trust to protect your kids now.
Why do you need an Attorney to get an Estate Plan?
Mall, Malisow & Cooney, P.C.
30445 Northwestern Hwy., Ste. 310
Farmington Hills, MI 48334
Office: (248) 538-1800
C/P: (734) 707-3165
Call, text (c/p) or email to set up a FREE consultation with a fellow young Mommy (who also happens to be an Attorney) to discuss your family’s needs. Be sure to mention that you are a reader of Metro Detroit Mommy!