It’s such a common refrain that many people believe it has to be true. “Only rich people need an estate plan,” is some common wisdom that far too many people believe. The truth is that everyone age 18 or older needs an estate plan, even if they are not wealthy or don’t think they’ll ever be wealthy.
Average Married Couples
A lot of people believe that estate planning is for the wealthy because the estate tax rate is so high that only the wealthy need to worry about it. While it is true that the 2012 estate tax exclusion was just over $5 million, the rate is $1 million in 2013.
However, even if estate taxes are something you will never have to worry about, estate planning is about more than tax avoidance. There are also questions about guardianships, medical planning and retirement planning that you will need to think about even if the estate tax is never something that will apply to you.
If you and your spouse don’t have children or don’t ever think you will, you may feel as if you don’t need an estate plan because you don’t have children to pass an inheritance along to. While you may not have children, that doesn’t mean you don’t have legal inheritors. Your state’s law has already determined who will inherit your property when you die whether you have children or not. If you do not create an estate plan, you will have no way to choose who your legal heir is, and will leave it up to the state.