When Do I Need an Estate Plan?
Posted on June 21, 2023 by Amanda Whitely
One of the most common questions we receive in our Estate Planning practice is “when do I need a personalized estate plan?” While there are many factors to consider, you will want a personalized estate plan when there is a significant change in your life, or you do not like the default plan created for you under Washington law.
The following default Washington estate plan already exists for you if you do nothing:
- If you are married, your surviving spouse is entitled to your share of the community property estate, and (i) one-half of your separate estate if you are survived by your children, (ii) three-quarters of your separate estate if you do not have children, but your parents or siblings survive you, or (iii) all of your separate estate if you have no surviving children, parents or siblings.
- If you are not married, your estate will pass in the following order to (i) your children, (ii) your surviving parents, (iii) your siblings, (iv) your grandparents, or (v) your aunts and uncles. In the event there are no legal heirs to whom your estate can pass to, your estate will escheat, which means that your property will revert to the state.
If this estate plan suits you, then you do not need to create a personalized estate plan. That said, in all cases, it is still wise to have powers of attorney for both assets and for health care, a living will (or physician’s directive), and a remains memorandum.
If you do not want the default disposition of your assets that Washington law provides, then you should create a personalized estate plan. A personalized plan will provide specific instructions over how your estate will ultimately be distributed, and whether your assets go to your family, friends, or charitable organizations.
Here are three examples of the milestones and life events when it would be appropriate to create an estate plan:
Marriage
Typically, each spouse wants the other spouse to inherit their entire estate outright. In Washington, this will occur if everything you own together is community property. If there is any separate property, your spouse will not necessarily receive your entire separate estate unless you have no surviving children, parents or siblings. A properly drafted last will and testament can ensure that your spouse receives your entire estate. Also, if your combined marital estate is roughly $3 million or more, it may be subject to Washington estate tax. In that instance, you should begin to consider whether your estate should be put into a special trust where your spouse maintains the benefits of ownership while shielding the assets from the estate tax.
Birth of a child
In the instance that both parents pass away, they likely do not want their children to control their inheritance until the children reach certain age milestones. To manage this, your estate plan can create a testamentary family trust that will protect your children and their inheritance in the event that they inherit assets at a young age. Depending on the potential size of the inheritance, parents can provide that certain percentages of the estate will come out of trust at ages 25, 30, 35, etc. Additionally, a personalized estate plan details who you want the guardians of your children to be if both you and your spouse are no longer around to take care of them. A court will have the ultimate say as to who is appointed the guardian of your children, but your estate plan will provide the information that the court needs to make that decision. A well drafted estate plan will provide you with the peace of mind that your children will be taken care of in the future.
Divorce
Prior to the finalization of a divorce, your soon to be ex-spouse is entitled to inherit under the laws of intestacy and your personalized estate plan (assuming you provided for your spouse). Once the divorce is finalized, your ex-spouse will be treated as having predeceased you. This essentially disinherits the ex-spouse but not until the divorce is final, which is why having a new estate plan in place while the divorce is pending is so important.
In sum, any milestone, major life event, or change in your circumstances is a great time to create a personalized estate plan or update your existing estate plan. The Estate Planning Attorneys at Lasher Holzapfel Sperry & Ebberson PLLC are available to help you design an estate plan that best matches your wishes or review and update your existing estate plan.
