Everyone Needs an Estate Plan

Everyone needs an estate plan. If you’re reading this, you’re probably aware that you–and if you’re married, your spouse–need an estate plan. But there are other people in your orbit who need an estate plan: your young adult children. Your children over the age of 18 need an estate plan, too. Yes, even the ones who still live at home, and the ones who you claim as a dependent. Or are away at college. Especially the ones who are away at college.

Anyone over the age of 18 is a legal adult. The law does not care whether that person is gainfully employed or playing video games until 3am. Reaching 18 years of age is an arbitrary measurement, and when it’s achieved, congratulations! You’re an adult! What comes with adulthood is the ability to make your own legally binding decisions… and to prohibit others from making decisions for you. Even if those “other people” are paying your bills, claiming you as a dependent, or housing you.

Consider your typical college-aged child. They are likely over the age of 18, or very close to it. They likely do not have much life experience, and base decisions on the nearterm. They may be impressionable, or easily persuaded. Or maybe they’re just a knucklehead. If, as a result of a misguided decision, they were to become incapacitated (think: hospitalized, detained by law enforcement, involved in a crisis, etc.), no one can make decisions for them without a properly executed estate plan–e.g., will, durable power of attorney, healthcare directive. Not even their parents! You see, they’re adults. Any institutions your adult child interacts with will only want to speak to your child. University administration, banks, authorities, doctors, school officials, etc., won’t listen to anyone but your adult child. They are legally prohibited from listening to third parties, even the parents of an adult.

A young adult crisis can appear anywhere. It could be a party gone wrong. It could be from spending time with that one friend of theirs that they just can’t seem to get enough of. Maybe it was a date or hangout gone wrong. If you, as a parent, want the ability to make decisions on behalf of your adult child, they must execute estate planning documents giving you that authority. Otherwise, you are at the mercy of the local court process. And if your child is away at college, that court process might be very foreign to you, operating under laws you aren’t familiar with.

Maybe your child is in a crisis because someone injured them. With a properly executed estate plan, your child could authorize you to file a lawsuit against the perpetrator on their behalf, speak to school administrators on their behalf, speak to the government on their behalf.

It doesn’t matter that your adult child doesn't “own much”. Or that they aren’t employed, or that they live at home, or live in a dorm and come home often. None of those things matter if your child is over the age of 18, and you want the ability to make decisions on their behalf in a crisis. Everyone needs an estate plan.

Estate Planning is Not for You

It’s for them—your loved ones, for those you care about.

When you are either deceased or incapacitated you obviously won’t be available to participate in the execution of your estate plan. Your estate plan is all that remains to assist in caring or providing for your loved ones or causes that you care about.

To that end, the most important aspect of an estate plan is the personal information and guidance that you provide to those who step in to execute your plan. Without that information and guidance, it could be a wild goose chase trying to piece together all the loose ends surrounding your life. The more loose ends, the more time and effort will be required to carry out your wishes.

Do your trusted agents have access to your passwords and credentials?

Our lives no longer consist solely of tangible assets. Sure, for most of us our homes are our most valuable assets. But more and more, our lives are becoming more digital and intangible–online financial accounts, cloud storage, digital photographs, social media accounts, cryptocurrency, etc. To access these digital assets, your trusted agents will need your passwords. Without them, federal privacy laws require a court order to access them. Your trusted agents require adequate time and evidence to obtain a court order. If it takes your agents too long to obtain the order, or if they lack the requisite evidence to persuade a judge to issue an order, the digital accounts may be terminated, blocked, and in some cases deleted. Even providing the PIN to your mobile device could save your agents time, expense, and a lot of expended energy.

Do your trusted agents have clear guidance on your wishes?

An estate plan allows you to document your wishes–how to handle your financial affairs, how to provide for your loved ones. But it’s only as good and thorough as the information you provide. Be sure to keep current documentation of your assets, your debts, and any specific instructions. A great place to keep this information is in your estate planning binder containing your legal documents.

Is your list of trusted agents current?

Our lives are ever changing. And so are the relationships we have with our loved ones. It’s critical that you revisit your estate planning documents to confirm that you have the most current list of trusted agents to step in when a crisis arises.

A current, detailed estate plan will allow your loved ones to step in and execute your wishes in that time of crisis. Chances are that you will be unavailable to provide any guidance or assistance when that time comes. Be sure the appropriate information is readily available for your trusted agents to minimize delays and confusion.

How to Disinherit a Family Member

Sometimes there may be a family member who you want to make sure does not receive anything from your trust or estate. Perhaps they have enough financial support that they do not need more or perhaps there is a personal rift. 

It’s important to know that there are certain people who you cannot disinherit by omitting them from your estate planning documents: a spouse and a minor child. There is a presumption in California that you intend to provide for a spouse and for minor children; therefore, leaving them out of your documents is not sufficient. For spouses, minor children, and (really) everyone else, there are steps you can take to make sure that your wishes to exclude someone are legally binding and not subject to litigation. 

What does it mean to disinherit? 

Disinheriting means affirmatively excluding relatives from becoming heirs or beneficiaries of your trust or estate. For example, if someone has an estranged parent or child, they may want to disinherit that person. 

No one is entitled to receive something from you after you die. However, in certain circumstances, spouses and children are presumed to have been intended beneficiaries. If you die without any estate planning documents OR all your named beneficiaries have predeceased you, then your assets could go to your closest living relatives. (Your closest living relatives are determined by state law and the list starts with your children, then your parents, then your siblings, then your nieces and nephews, then aunts and uncles, then cousins, etc.) 

How do I disinherit? 

If there is a close family member who is potentially entitled to receive something (a parent, child, sibling), then it is important that the person is explicitly named and acknowledged, and that the person was intentionally excluded as a beneficiary. 

What about a token gift? 

If you provide a token gift (e.g. $1) then that person becomes a beneficiary. Beneficiaries are afforded rights of notice and due process, regardless of the size of their gift. By learning that they received merely a token gift, they may feel emboldened to file a law suit. Even if their claim ultimately lacks merit, your trustees may feel compelled to settle the suit, since it is often cheaper to settle than to prove the claim lacks merit. If your intention is to EXCLUDE someone, then you probably don’t want them on that list of beneficiaries. 

What about a bigger gift? 

Sometimes, the best way to “get rid” of potential litigation is to give someone enough that it’s not worth their time to file a lawsuit to try to get more. If you give someone $1, it’s easy to say that they have nothing to lose in filing a suit. If you give someone $1000, it may not be worth it to them. 

What about “no contest” clauses? 

A no contest clause is a part of a will or trust that says that anyone who contests the document, and fails, won’t receive anything. In California, courts are reticent to lock potential viable claims out of court. So no contest clauses only practically come into play for claims with zero merit on its face. The economics of litigation often result in out of court settlements, even when a claim lacks merit. Although no contest clauses are considered best practices, you do not want to rely on such a clause to prevent future will or trust contests.  

So what should you do if you want to leave someone out? 

If you decide to disinherit a family member, call us to discuss options for how best to proceed.