Get An Estate Plan
This one is pretty straightforward; if you are 18 or over, you should probably get an estate plan. And that's whether or not you own anything. Here's why.
Probably the most overlooked aspect of an estate plan is a heath care directive, meaning who can do what in the unfortunate event you are unable to take care of yourself. Once you are a legal adult, no one has the right to act on your behalf automatically, often times even a parent. So while no one plans on a physical or mental catastrophe, it's less difficult than you might think to set yourself up with some documentation that will detail how to handle such an event.
And this is just the tip of the iceberg. For most other adults that own a bank account, a car, or real property, the reasons to have an estate plan in place are all the more apparent. We spend our whole lives trying to acquire wealth, primarily for ourselves and our families, or in some cases (the charitable amongst us), for others whom we don't know but to whom we'd like to contribute. But what happens our stuff if we die? Who decides? The short answer is probate. Probate is a court process whereby the distribution of your stuff--plus the when, who, and how--is adjudicated. As you probably guessed, this isn't free for your estate, and takes a lot of time (this Cincinnati Business Courier article that is the subject of this blog post estimates between 12-18 months on average in the great state of Ohio). The reason for this is a combination of lawyer fees and court costs, and it's also been said this can be about 2-3% of the entire estates value. In combination with the time it takes, not to mention the headache that you'd be giving the executor of your estate (the person who you appoint--and agrees--to manage this process), this whole thing doesn't sound ideal. And it's not.
So what can you do? Get a trust and a pour-over will. Before you can ask, "what is that?," I'll tell you why else you want it. Wills, which are what most people think of as things you can draw up on a napkin before you take your last breath, still trigger probate. Even if they are well crafted and professionally done. Trusts, however, are private agreements that escape the entire probate process, and they are really only revealed to the trustee (like an estate executor), and the beneficiary (he or she whom is bequeathed assets through your trust), so it keeps your matters from being placed in public record, as they are with wills and probate. Further, and most importantly, trusts allow you to dictate what happens to your assets after you die. Exactly what happens. Who gets what, when, how, and any other stipulations you may want to place. It's all up to you. The best thing is that it happens basically immediately. No probate court process, no time and money wasted, no privacy compromised. You can even give parts of your estate to charity, not just relatives, should you be inclined to do so.
Don't worry about not having a lot of things you name specifically to be placed in your trust. A pour-over will picks up the slack by placing everything your own that is not named specifically in the trust, into the trust when you die. This is typically things you have in your house; TV's, pianos, heirlooms, jewelry, and even bank accounts and cars, to name a few common things. You can also change any and everything about your trust during your life. From the assets, to the stipulations, to the beneficiaries or the trustee, it's completely modifiable. These contractual mechanisms aren't just for rich people who have a lot to protect. Beneficiaries can benefit from trusts by keeping creditors from reaching funds, as trusts can be made exempt from certain debt payments and also potentially excluded from divorce proceedings, as they are seen as separate property. Moreover, you don't have to be rich to set one up. With Where's Legal?, you'll have a lawyer draw up a custom one for you starting at around $700. That's a pretty good deal considering the risk you take when you go without one.