“If you live in this area, have a home, have a pension plan — [if] you have a Thrift Savings Plan and a little bit of life insurance, at least on paper, you’re what the government considers to be rich. Taxes can enter into your planning, but even if you don’t have that, you still need an estate plan. Even if the only person in your life that you care about is yourself, everybody needs some basic estate plan.”
Keeping your estate plans up to date is also important, O’Rourke explained, because dying with no will puts the state in power.
“Every state, no matter where you live, has a plan for you — and that plan has a one-size-fits-all estate plan. It distributes your property in a specified way. Now, most typically, your property is distributed equally among family members. If you’re married, usually your spouse inherits part of your property, and your children inherit part of the property. If you aren’t married, it usually goes to your kids, if you have them. If you have nobody, your estate can end up going to the state where you live.”
When it comes to estate planning, however, things don’t come cheap. O’Rourke said that it can generally cost anywhere between $500 to $5,000 to come up with a solid plan, depending on the circumstances.
He does warn, however, to shop around for the right person — and to never trust someone who can give you an immediate quote without examining your particular circumstances first. A good estate planner will meet with you and ask extensive questions.
In addition, O’Rourke explained that estate planning can prevent a grieving spouse from having to deal with unpleasant surprises.
“If the total value of your assets of you and your spouse together is more than $1 million — and I know that is a lot of money — but for folks who live in the D.C. metro area and own a home, have a job, and have a little bit of life insurance, many times those folks live paycheck to paycheck, but have an estate that’s worth more than $1 million. The reason that’s important is because, at least in Maryland and D.C., if you have an estate that’s worth more than $1 million, you can have an estate tax liability that could easily be avoided by doing some very basic planning.”
O’Rourke said, in his opinion, everyone should have three basic documents as their overall estate plan: a will, a medical directive, and a durable financial power of attorney.
“Everybody needs those three very basic documents, whether they have a lot of money, a little bit of money, or no money at all. The issue about whether you need somebody to act on your behalf — whether you become incapacitated — has got nothing to do with how much money you have. All of us are just a moment away from becoming incapacitated. For anybody who drives on I-395 or the Beltway, you can be involved in an accident just as easily, whether you’re 18 years old or 80 years old.”