If you are new to the concept of estate planning, you can get swamped with issues fairly easily. Many people put off starting or even delay completing their estate plans while trying to finalize difficult decisions. Estate planning is so important that making “a” decision is better than making no decision. Start with the basics, says Forbes’ recent article entitled “The Importance Of Estate Planning.”
An estate plan is a collection of legal documents that details the way in which you want your assets distributed after you die, along with how you want people you select to handle health and financial decisions, if you’re unable to do so for yourself while you’re alive. The fundamental purpose of estate planning is to make sure that your plans, and the documents that implement those plans, properly carry out your wishes if you are incapacitated or die.
A comprehensive plan written by an experienced estate planning attorney can help you feel more confident about the future because you’ll know your loved ones will be cared for and that the legacy you leave behind is the one you planned. Well thought-out planning now can help decrease any taxes and probate fees and make certain that your loved ones will have less to worry about and less stress when you are gone. However, if you don’t make plans for your estate, it can result in unintended complications for your family.
Let’s look at some of the essential planning documents:
- Will: This is an important document in your estate plans. Your will designates an executor (or personal representative) to administer the distribution of your assets as you want. In your will, you can also appoint guardians of minor children who will care for them.
- Durable Power of Attorney: This document names a trusted family member, friend, or advisor to serve as your agent to act on your behalf in your financial and legal matters. Typically, this same individual is named as your successor trustee of your trust.
- Healthcare Power of Attorney: It will name a trusted individual to make medical decisions for you when you are unable, and permits access to your medical records (some institutions may require more documentation for full access to medical records).
- Living Will or Healthcare Directives: This is where you can state your end-of-life care wishes. Healthcare directives can cover pain relief and whether you would want a feeding tube, resuscitation, etc. under certain healthcare situations.
- Revocable Trust: This is the key to a well-structured estate and provides so many advantages to avoid probate and transfer your property to your loved ones in the most efficient means possible.
You also need to regularly review and update your estate plan. There may be changes in probate and tax laws, as well as life changes, such as marriage, divorce, or the birth, adoption, or death of a family member that require a revision of your plan. Avoid the first mistake of planning, start now.
Reference: Forbes (March 2, 2020) “The Importance Of Estate Planning”