Good question! The answer is: Yes.
You might be young or think you don't own very many assets. You might see no reason to spend money on a professionally prepared estate plan at this stage of your life, or maybe ever. I might be biased here, but I strongly encourage you to consider getting a complete estate plan now. Let me explain why...
Estate planning allows you to:
Control your property while you are alive and well.
Provide for yourself and your loved ones if you become incapacitated or disabled.
Give what you have (1) to whom you want, (2) the way you want, (3) when you want.
Minimize the impact of professional fees, court costs, and taxes.
Who Needs an Estate Plan?
An estate plan is the best way to protect for the well-being of your child, even children who are now adults. Not only does an estate plan allow you to name who you want to care for your child if you pass away, but you can also make certain specifications on how your child is raised. In addition, you can structure your assets so as to make sure your child is financially taken care of through his or her life. For adult children, having a well prepared estate plan prevents them from having to go to the probate court and can avoid family in-fighting by laying out in detail what your wishes are.
In many ways, your own business can feel like your child, and you want to make sure it is similarly protected if something happens to you. If you are temporarily incapacitated, such as by injury or illness, you want to make sure that your business is well taken care of so that it survives until you are read to take back the reins. You may also want to dictate who controls your business after you are gone so that what you built doesn't die with you. An estate plan allows you to do all of this, specifying how it should be run during a temporary absence and who should continue your legacy into the future.
everyone! (Not just rich people)
Some people think an estate plan is only necessary for the super rich, but that simply isn't true. In California, almost all estates that are not in a trust must go through the probate court. If you own a car, a home, a checking or savings account, life insurance, jewelry, etc., then you have an estate, and all of the benefits described above apply to you. Don't let the State of California and an impersonal legal system dictate what happens to your stuff and your family if something bad happens. It's your stuff, it's your family, you should get to decide how it is treated in your absence.
Benefits of an Estate Plan
INCAPACITY PLANNING: A will explains what you want to happen to your stuff when you die. But what if you don't die? What if you become temporarily sick or injured? An estate plan allows you to lay out your wishes for if that happens. You can explain how you want to be treated, who should deal with your financial commitments so that your bills are paid (and your lights stay on) while you are out of commission, and who can make healthcare decisions for you. An estate plan lets you maintain control of your life, during your life.
AVOIDING PROBATE: An estate plan includes a revocable living trust, which is essentially the same as a will (with one major difference, which I will get to in a second). Like a will, it has no effect on your ability to control your assets during your life and you can change or revoke it at any time. However, if you pass away with a will instead of a trust, no matter how perfectly written it may be, your family will have to go to the probate court to have it administered. Let me tell you from personal experience, having to go to probate court, especially in California, is a nightmare. Here are a few downsides:
TIME: In California, getting a will through the probate court takes, on average, 1.5 to 2 years. (It has taken me over 6 years for my mom's will.) This means that the assets distributed through the will will not go to the beneficiaries until the process is over.
MONEY: When you go to the probate court, an attorney must be hired to represent the estate and ensure that the instructions in the will are followed. In California, these attorney fees are set by statute and eat up, on average, about 5% of the estate. (So, on a $1 million estate, the lawyer (as well as the executor, unless the executor chooses to waive his or her fees) will be paid $50,000.) While an attorney will also be needed to administer a trust, the fees are typically significantly lower than the fees paid to an attorney in probate.
PRIVACY: Documents filed with the probate court are public record. This means that anyone can access your will listing all of your assets and what you want done with them. In addition, information about the beneficiaries listed in your will becomes public record. It is not unusual for beneficiaries to receive phone calls after a will goes to probate from various "professionals," such as real estate agents pushing them to sell a house they inherited or life insurance agents trying to sell them products to "protect" their new inheritance.
EMOTION: Losing a loved one is often a horribly painful experience. No one wants to worry about hiring lawyers or going to court on their best days, and they definitely don't want to think about these things while in mourning.
CONTROL: An estate plan lets you maintain control of key decisions during your life and treatment of your assets afterwards. Unless you choose to make it irrevocable, any decisions you make in an estate plan can be changed anytime during your life. You can lay out your preferences for how you want to be treated if you become sick or injured, how long you want to be kept on life support if that situation arises, and what you want done with your stuff if you pass away. You don't have to just give everything away all at once upon your death: you can control at what pace your beneficiaries receive money, and you can provide for future generations as well. If it's important to you to provide for family members if you pass away, then an estate plan provides the best vehicle to do that.