Maybe it’s the word “estate” that throws so many of us off, but there is something about the idea of estate planning that calls to mind the Warren Buffets and Bill Gates of the world. This tends to lead those of us who are not among the mega-wealthy to believe we’re off the hook.
The truth is, estate planning is about achieving some pretty common goals and taking care of basic responsibilities, regardless of how big or small our investment portfolio happens to be. For example, regardless of your financial picture, you probably want to make sure your spouse and children are provided for in case of your untimely death. You also likely want to make sure there’s some kind of a plan in place so that things run smoothly if you’re in the hospital and can’t take care of the family finances for an extended period of time. And, of course, most of us would ideally like to leave the world – or at least our little corner of it – better than when we found it.
Estate planning can help with all of these objectives. For instance, every adult needs an incapacity plan. This includes several documents. The first is a Durable Financial Power of Attorney. This allows you to appoint an agent (typically your spouse) to manage your financial affairs in the event you suffer an illness or injury that results in your inability to pay your own bills or manage your own financial accounts. An incapacity plan also includes a Health Care Power of Attorney, with which you name an Agent to make medical decisions on your behalf, and a Living Will, with which you spell out the medical interventions you do and do not want in case you are in a persistent vegetative state or in the final stages of a terminal illness.
What would happen to your family in the event of your death? With a Will, you can establish a framework for who will inherit your assets when you pass away, and you can name a guardian to take care of your young children in case both you and your spouse pass away in an untimely manner. A Living Trust goes several steps beyond a Will, allowing your assets to avoid probate at your death, keeping the terms of your estate plan private, among other things.
When you have a Will or a Living Trust in place, you can ensure that your property goes where you want it to go when your life is over. If you want to make sure that your pets are provided for, or that a portion of your property is earmarked for a favorite charity, then these documents can include provisions to achieve these goals.
Estate planning is not just for the wealthy – it is a right and a responsibility that belongs to each of us.
By: The American Academy of Estate Planning Attorneys