Valentine’s Day is upon us again. And rather than chocolate or flowers (well, still give the chocolate), why not surprise your family members and loved ones with a well-thought-out estate plan?
What Is Estate Planning?
Estate planning isn’t about having an estate or being wealthy. It is about planning for the future to protect those you love.
When starting the estate planning process, you may want to address certain questions:
- Who will handle my financial matters if I can’t?
- Who will handle my health care if I can’t?
- Do I want life-prolonging measures taken if I am dying?
- Who do I want to receive my property after I die?
- Who do I want to care for my minor children if their other parent isn’t available?
- Do I have dependents with special needs that require special planning?
- If I have a business, what happens to it when I am gone?
By focusing on these questions, you can create the estate planning documents you need.
What Legal Documents Make a Complete Estate Plan?
There are several components to a complete estate plan that will help you and your family if you have an incapacity during your lifetime and also after your death.
Last Will and Testament
What is a will? A last will and testament allows you to name a personal representative or executor to manage your estate, give your property to the beneficiaries you want, and name guardians for your minor children. Additionally, a will speeds up the probate process because the probate court follows your wishes, not intestacy laws (state law for property distribution when someone dies without a will).
How does a will help your family? Your family benefits from your planning. There is no uncertainty about who will care for your children or who inherits your estate. Additionally, you have significantly streamlined the probate process for them, which saves time and money.
Financial Power of Attorney
What is a financial power of attorney? A financial power of attorney allows you to name an agent or attorney in fact, to manage your financial affairs if you are suddenly incapacitated. Some people use a financial POA for convenience, for example, if they travel frequently. Your agent has a fiduciary duty to act in your best interests, so if you cannot manage your affairs, your agent helps you and your family.
How does a financial power of attorney help your family? If you are unable to handle your financial matters, your agent steps in your shoes to provide for your family. They can access bank accounts to pay bills and file taxes. They can also handle real estate transactions and insurance, among other things. Your agent maintains your loved ones’ maintenance and support.
Health Care Power of Attorney
What is a health care power of attorney? A health care power of attorney or medical power of attorney allows you to name a health care agent to make health care decisions when you can’t. They can consult with doctors and make decisions about your health care that serve your best interests. If you have health care instructions, such as an advance medical directive or living will, your agent follows those instructions.
How does a health care power of attorney help your family? Your family knows you put someone in charge to handle these decisions, so they don’t have to decide among themselves. There is one person to consult for information, and medical professionals recognize they can share medical information with your agent.
Advance Medical Directive or Living Will
What is an advance medical directive? An advance medical directive, advance healthcare directive, also known as a living will, allows you to specify what life-prolonging measures you want or don’t want when you have a terminal illness or are dying. You detail if you want pain relief medication, hydration, nutrition, and artificial means of life support. Your doctors and health care agent follow your wishes for your end-of-life care.
How does an advance medical directive help your family? Your family has peace of mind knowing they can honor your end-of-life wishes and not have to make these difficult decisions themselves. Many families disagree on life support or life-prolonging measures. Take the decision (and angst) away from them by putting your wishes in place.
What is a trust? A trust is a legal agreement that you, as the grantor, put property in a trust. A trustee manages those trust assets for the trust’s beneficiaries. Depending on your needs, a revocable living trust or irrevocable trust may be a good addition to your estate plan, especially if you have concerns about dependents with special needs, federal estate taxes, or long-term care and Medicaid eligibility. Trusts are tricky, so it is best to consult an estate planning or elder law attorney if you think this is the right strategy for you.
How does a trust help my family? A trust takes assets out of your name, so you are no longer the owner. These assets are held for your beneficiaries. By taking them out of your name (and therefore your estate), you reduce the size of your estate. This may help to minimize estate taxes or qualify for special programs such as Medicaid.
Besides These Important Documents, What Else Should You Do?
You likely have assets that you cannot pass on to someone else through a will, such as bank accounts, life insurance policies, annuities, retirement accounts, or IRAs. Check the beneficiary designations on those accounts and policies for accuracy and ensure you have contingent beneficiaries in case your first designation dies before you.
Can I Make My Own Estate Plan?
Yes. If you have a simple estate and know how you want to distribute your property to your beneficiaries, it is easy to use online estate planning services. However, if you have significant assets, concerns about estate taxes, or a dependent with special needs, you may want to contact a local estate planning attorney for legal advice.
The important takeaway is that any advanced planning benefits your loved ones and gives you and them peace of mind. Although legal documents aren’t romantic or sexy, you can show your love by protecting those you care about with a comprehensive estate plan.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.