Despite the lessons learned during the COVID-19 pandemic, a recent survey reported by Kiplinger reveals that most Americans still lack a crucial tool for their financial and personal well-being: an estate plan. An astonishing 75% of respondents didn't have a plan, and even more startling, 72% of respondents over the age of 75 lacked essential estate planning. It's a task often postponed, largely because no one enjoys contemplating their own mortality or that of their spouse. However, not having an estate plan condemns your loved ones to a costly, time-consuming, and distressing ordeal that can be easily avoided.
It’s an easy task to postpone. No one likes to think about death, their own or their spouse’s. However, not having an estate plan condemns your loved ones to deal with an expensive, time-consuming, stressful mess that can be easily avoided.
Why Estate Planning is Important
Estate planning involves the creation and execution of the documents needed to address healthcare, financial, and legal affairs in case of incapacity or death. This is done with a series of documents created by an estate planning attorney. The names of the documents vary by state, but their function is roughly the same:
- Guardianship—if there are minor children, the will names who will receive custody of your children if you and your spouse both die.
- Will—A legal document used to express your wishes to distribute your property, name a guardian and an executor.
- Trust—A fiduciary agreement used to shield your estate from probate and allow further customization of your estate plan.
- Durable Power of Attorney—A legal document naming a spouse, partner, or other third party to manage finances if you can’t manage your own decisions.
- Advanced Care Directive—A document outlining the medical care you want or don’t want if you can’t make or communicate these decisions on your own.
- Medical Power of Attorney—A document naming a third party to make medical decisions if you are incapacitated.
- HIPAA Authorization—A document giving another person the right to view medical and insurance records and communicate with healthcare providers.
Why should you go through the trouble of having all these documents created? If focusing on the benefits of having an estate plan is the motivation you need to get going, here are several good reasons to have an estate plan.
- Securing management of health care and finances if you’re incapacitated. No one likes to think they’ll ever be too sick to care for themselves or make their own decisions. However, this happens routinely to older Americans. Diseases like Alzheimer’s and other illnesses strike older adults with increasing frequency as they age. If you have an estate plan in place, family members can step in to take care of you if necessary. They’ll be able to pay bills to keep your household running smoothly, speak with your doctors and avoid going to court to obtain guardianship or conservatorship.
- Fulfilling your wishes. Lacking a will, the laws of your state will determine how your property is distributed, with most states following a next-of-kin lineage. If you want your spouse to inherit everything and the state law divides your estate so 50% goes to a spouse and 50% is divided among the children, the state law will rule. ---Another set of problems comes from outdated wills. If you named someone to be your executor thirty years ago and haven’t updated your will, they may no longer be in your life, or you may not want them administering your estate. Another problem is that if you’ve divorced a spouse and never updated your will, life insurance policies, or retirement accounts, your next call should be to your estate planning attorney and insurance agent.
- Avoiding probate. Probate is a process where your will is filed with the court, reviewed by a judge,and approved—or not—to be administered. Depending on the jurisdiction, all documents, including your will, are available to anyone by searching the public records. An estate planning attorney can help you decide what assets you are willing to have to go through probate and what might be removed from your estate using trusts. Trusts provide more control over asset distribution and, depending upon the trust used, can provide protection from creditors and nuisance lawsuits. Trusts are also used in tax planning, which should go hand-in-hand with estate planning.
Estate planning is about more than just distributing your assets; it's about safeguarding your health, finances, and wishes in case of incapacity or death. A well-thought-out estate plan involves several vital documents, including guardianship for minor children, a last will and testament, trusts, durable powers of attorney, advanced care directives, medical powers of attorney, and HIPAA authorizations. This comprehensive approach ensures you are protected during your lifetime and offers a legacy of support for your family. Don't wait any longer. Embrace the many benefits of estate planning to secure your future and protect your loved ones. Reach out to Vick Law, P.C. today to get started on your personalized estate plan. Your family will thank you for it.
Reference: Kiplinger (September 6, 2023) “Three Overlooked Benefits of Estate Planning”