It\u2019s a very common sentiment. You need an estate (as in Downton Abbey) before you need an estate plan. People with a lot of money can achieve nearly unbelievable tax savings with the right kind of plan, but that\u2019s estate TAX planning. Plain old \u201cestate planning\u201d is something else altogether, and pretty much everyone over the age of 18 needs at least a little estate planning.\r\n\r\nLet\u2019s start by defining plain old \u201cestate planning.\u201d There are two parts to it.\r\n\r\nFirst, an estate plan identifies the people you want to benefit from your assets. Owning \u201cassets\u201d is not the same as having \u201ca taxable estate.\u201d (More on that in a minute.) Your assets include your bike, car, house, furniture, personal items, checking account, savings account, retirement accounts, life insurance and business interests. Although people tend to think that estate planning is morbid, it\u2019s actually about life and making sure that your assets provide support for the people you love. It isn\u2019t about controlling from the grave, it\u2019s about creating opportunities that continue to give benefit for years to come.\r\n\r\nSecond, an estate plan identifies the people you trust to take care of yourself and your assets if you\u2019re unable to do so. This includes identifying someone to pay your bills (your agent under power of attorney), manage your accounts (your executor or trustee, depending on whether your plan uses a trust), and interact with doctors (your health care agent). If you have young children, this also includes naming someone to raise them (your guardian). These are by far the most important decisions you\u2019ll make as you create your plan, and it\u2019s crucial to identify people who have the time and temperament to take on these tasks.*\r\n\r\nSo why do we say that everyone over 18 needs at least a little estate planning? Let\u2019s consider life in stages.\r\n\r\nWhen you\u2019re in college, you may consider yourself dependent on your parents, but the legal system doesn\u2019t. As an adult, you are entitled to identify the people you want to make health care decisions for you if you can\u2019t. Many young adults would give that authority to their parents if asked, and doctors will usually turn to parents for those decisions, but when these issues arise, it\u2019s because something unexpected has happened. To avoid confusion, every 18-year-old should have a health care power of attorney, which can include instructions about life support. Similarly, every young adult should sign a durable general power of attorney identifying the person who steps into his or her shoes for all other purposes, including accessing bank accounts and school records. If you\u2019re a parent, this is a good way to teach your young adults about managing their personal and financial affairson their own. If you\u2019re a young adult, it\u2019s a good start in taking control over the most important decisions in your life.\r\n\r\nRight after college, you\u2019ll 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\u2019s 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 \u201cintestate succession\u201d 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\u2019s better to give that instruction in a will instead of relying on a state\u2019s 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.\r\n\r\nOnce you get married, your spouse moves to the top of the list of people who should manage your assets and make health care decisions if you can\u2019t. But, again, it\u2019s best not to rely on default rules. Update your health care power of attorney and your general power of attorney so your decisions are clear so your spouse and your parents don\u2019t end up locking horns. And think very carefully about how you take title to assets after you\u2019re married. It\u2019s incredibly easy to take title jointly because that means the survivor automatically inherits the asset if one spouse dies. But joint ownership gives the survivor absolute control over where assets go after his or her death. If you want assets to pass to specific people after your spouse\u2019s death, then get advice about establishing a trust.\r\n\r\nHaving kids is a great joy, but nothing else is as good at making you feel the responsibility of adulthood. You now have the task of deciding who will raise the little butterballs if something happens to both parents while they are young. It\u2019s time to add guardian nominations to your will. Although parents often struggle with this decision, the choice is often easier than expected. If you ask each of the new parents to write down the list of possible guardians, nine times out of ten the lists will contain the same group of people. Narrowing down to the top one or two choices seems daunting, but the job gets easier if you shift your focus to the kids of the potential guardians. Once you realize that a couple of your choices have not only made it onto your list but they\u2019ve raised kids you\u2019d like to be role models for your kids, then the choice becomes pretty clear. As part of the same exercise, you need to decide who should manage the assets you\u2019ll leave to your kids, and you\u2019ll almost certainly want to establish a trust so you can give instructions about how those assets should be used to support your kids while they are young. Keep in mind that these can be different people. You can choose one person to raise your kids and someone else to manage assets for them.\r\n\r\nSo remember \u2013 estate planning isn\u2019t about taxes. It\u2019s about making decisions about your life instead of relying on default rules written by a team of legislators. And it\u2019s about putting the people you trust in charge instead of letting someone else (like a judge or a doctor) take over. In the end, it\u2019s about staying in control.\r\n\r\nStart Managing Your Finances With Personal Capital\r\n\r\n_____________________________________________________________________\r\n\r\n* For the sake of thoroughness, \u201cestate TAX planning\u201d means the coordinated use of complex strategies recognized by Congress and the Internal Revenue Service as ways to avoid the federal estate tax altogether or at least reduce the value of assets that will be subject to it when you die. To decide whether you need estate tax planning, you start by adding up the fair market value of all your assets. If the total value exceeds $5 million, then your family will face a 40% tax on every dollar over $5 million. Luckily, that exemption amount is adjusted for inflation, and in 2015 it\u2019s actually $5,430,000 per taxpayer. A married couple can own $10,680,000 before they worry about the estate tax. Now you see that estate TAX planning does require an estate like Downton Abbey. For the rest of us, we can focus on plain old estate planning.