Estate Planning for the Middle Class

Am I really “middle class”?

I am.

This is for my friends, neighbors, and clients who are fellow members of the middle class.

I don’t aspire to be in the billionaire’s club, sounds too complicated, a “how to not smell the roses” lifestyle, and I have too little time for roses already just managing my meager middle class resources.

I will leave it to the sociologists to define precisely what “middle class” means.

They typically sub-divide us into (1) lower middle class, and (2) upper middle class.[1]

When I say “middle class,” for our purposes, I am referring to people who work for a living, who do not own an island or a private jet or walk down a red carpet.

Just looking at numbers, if you have a net worth of more than four to five million[2], I relegate you to upper class, although not upper-upper. That’s reserved for the Koch brothers and George Soros (just to show that I guard my political biases carefully).

Do I really need estate planning?

“All I have is three companies, four children by three different spouses, two step-children, a residence (with a mortgage and a HELOC), a vacation home (which might be a timeshare; I really can’t remember), a grandchild born out of wedlock, several IRAs (I think one may be a Roth), at least two joint tenancy with right of survivorship accounts (about which I am largely unaware), a few heirlooms, a cat, two dogs, some life insurance (I can’t remember how much), and a variable annuity I bought back in the eighties.”

See?

This may not be you, but it does not take much to see that, even without the billions, middle class life gets complicated.

What to do?

The good news is that sorting out and organizing is relatively inexpensive (especially when compared to litigation!), and that four basic concepts apply to most of us: (1) wills, (2) trusts, (3) planning for disability, and (4) beneficiary designations.

Here is the short course:

1. If you own much of anything, you probably need a will.

2. If you have kids and grandkids (or may have them in the future), you may need a trust.

3. If you own real estate in another state, you definitely need a trust.

4. Unless you live in a bubble-tent, you need to plan for disability (and, if you do live in such a place, you are most likely already disabled – sorry about that).

5. If you have life insurance, retirement plans, or various exotic employee benefits, you need to make sure that your beneficiary designations are as they should be.

6. Avoiding probate, while not as important in Texas as in some other states, is a good idea and should be considered.

7. If you are married, and, especially, if you have been married more than once, you need to consider a marital agreement.

I will post a series of more specific blogs on each of the topics referenced above, so stay tuned.

Many of the rules governing these concepts differ from state to state. This paper is for residents of Texas; some of the concepts will apply to other states, but, if you reside in one of them, best to double check me!

Sorry, Goldilocks, there is no middle middle class.

 Double that for a couple.