To many people, it sounds complicated and foreign, something only the wealthy or the elderly need to worry about. It is often not at the top of the priority list for single people or for young couples. Even parents with young children, who know they should at least have a Will, tend to think of estate planning as somehow beyond their reach.
In truth, regardless of your age, your situation in life, or your level of wealth, estate planning accomplishes certain universal goals.
Planning for Illness
What would happen to you or your family if you became very ill – or even if you suffered a debilitating injury – and you couldn’t make your own financial or medical decisions? If you are married, you might assume that your spouse would automatically have the right to step into your shoes and make these decisions for you. However, this is not necessarily the case. If you have accounts on which your spouse is not a joint or authorized user, he or she would likely hit a brick wall when trying to communicate with your financial institutions. The same problems can arise when it comes to talking to doctors or accessing your medical records. If you are not married, your friends or family members would face similar difficulties.
Without the right plan in place, financial and medical institutions require a court order before they will communicate with anyone attempting to make decisions on your behalf. This puts your loved ones in the position of hiring a lawyer and spending time and money in court during an already stressful time in their lives and yours, simply so that they can handle your daily affairs. Add in relatives who disagree over how your affairs should be managed and the trouble compounds.
Whether you are married or single, regardless of your age, you should have a General Durable Power of Attorney, a Health Care Power of Attorney, and a HIPAA authorization.
A General Durable Power of Attorney allows you to name someone to manage your financial affairs in case of your disability. A Health Care Power of Attorney lets you name someone to make medical decisions on your behalf, and a HIPAA authorization lets you direct your physicians and medical facilities to release medical information to certain, specified individuals. These documents work together to keep the details of life running as smoothly as possible for you and your family, without the need for a court order.
Planning for Death
Nobody likes to think about death, but it can happen at any time. If you have not created a plan, the family you leave behind will have to pick up the pieces. The most basic way to plan for death is to create a Will. You use your Will to leave instructions for who gets which of your assets and when, as well as to name a guardian for your minor children.
A Revocable Trust goes a step further, allowing you to distribute your assets while avoiding the time and expense of the probate process. An additional advantage of a Revocable Trust is that, since it is not subject to probate, the terms of your Trust remain private. This is not true of a Will, which is filed in court during probate and becomes a matter of public record.
Estate planning does not have to be complicated, and it is certainly not only for the wealthy or the elderly. Planning your estate is a matter of putting together a few elements that will protect you and your family in case the unexpected happens.
By: The American Academy of Estate Planning Attorneys