Estate Planning Isn’t About Taxes. And Everyone With Assets Needs To Plan
By Mark Powell
Right after college, you’ll start to acquire assets, the most common ones being retirement plans and employer-provided life insurance. Beneficiary designations filed with the plan administrator or insurer control the eventual distribution of such assets, but it’s still important to have an effective general power of attorney authorizing someone to make decisions about the assets if you become unable to do so. For example, there may be investment decisions that need to be made for your 401(k) account every year. As you acquire other assets (such as cars or condos), it becomes important to give instructions about who should receive them upon your death. In the absence of written instructions, most states direct those assets to your parents through “intestate succession” rules. That may not be what you want, in which case you definitely should have a will. Even if you want your assets to go to your parents, it’s better to give that instruction in a will instead of relying on a state’s default rules. In some states they cost you a lot of time and money. For example, in California where I live, probate court costs start at 4% of the fair market value of your assets, and the process can easily take 18 months.