One of the most frequent questions I’m asked is how much money does a person need before making an estate plan. But truthfully, an estate plan very rarely is about the money. It’s much more about ease. If there is money planning makes sure it transfers effectively (both in time and cost), but it’s really about providing for both the person making the plan and their loved ones.
The less money you have, the less you are able to waste on attorneys and the court system. The first place this really matters is if you can’t make your own decisions anymore and you’re incapacitated. If you don’t have a power of attorney, no one has access to your bank accounts, social security, pensions, etc. If you cannot access them yourself and there is no power of attorney, someone must go to court through a conservatorship proceeding. This can be expensive, a few hundred to a thousand plus dollars. Because of this, it’s often not worth the proceeding just to access a small bank account. Instead, most people then have to wait until someone has passed to access these accounts. That means it’s a huge financial burden for the person taking care of you. A power of attorney very easily and cost-effectively prevents that issue.
I get phone calls on a regular basis about someone who can no longer access their own accounts and want a power of attorney. But by that point it’s too late and they’d have to go to court, but it’s just not worth the money. So planning in advance really can solve a major problem and heartache for those taking care of you.
The other situation most people think of is when they pass. If people don’t have a lot of money, they often don’t think it’s worth spending money in advance to make sure the assets are passed to the family. But when there isn’t a plan and ANY money is left behind, it can cost hundreds to thousands or more for that money to go to whom it’s intended. Wouldn’t you agree it makes more sense to do it in advance for often times much less money and definitely more ease?
It breaks my heart when I have a family call who needs access to the few hundred or thousand dollars a loved one has left, but it would require dozens of hours of attorneys fees to access. It’s a problem very easily prevented with a proper plan.
So, next time you hear someone say “I don’t have an estate to plan” please realize it’s not about the size of the estate, but often times much more about the need.