There are definitely more reasons why you need an estate plan than there are reasons you don’t. Unfortunately, it takes a little time and effort to move things forward…but the rewards far outweigh the time and effort it will take. The biggest issue people don’t do it is because they don’t want to think about death and their passing. I agree, not the best topic for discussion…but the results from having this discussion are massive.
Most Americans don’t have an estate plan. That’s not a good thing for their heirs, minor children or business partners. In the hopes of encouraging baby boomers to step up and get this right, Country Living offers the basics in its article “Everything Baby Boomers Need to Know About Estate Planning.”
There is no question that everyone needs an estate plan…regardless of whether you are wealthy or just getting by, older or a young parent, single or married, you need to have an estate plan. While your plan won’t look like others, it will do what it is you want to have happen should something happen to you. These are “custom suits” that are built for your individual circumstances. And they accomplish what it is you want for your loved ones…but everyone needs one.
The first things to understand and dispel is that estate planning doesn’t have to be scary or complicated. Often times people feel that creating a will and other related documents will be overwhelming. It doesn’t have to be. An experienced estate planning attorney can easily guide you through the process by teaching you what your particular situation requires. It rarely take as long as most imagine and the time and expense you save your heirs by having a professional put this together for you will be well worth the money spent.
One area that often goes unnoticed is how much of a difference you can make with your estate plan. With a well thought out estate plan, you can give to a charity or cause that is important to you and your family. Many use a charitable gift in their will, known as a “bequest,” to leave money behind—often times it ends up being the biggest donation they make. It’s a way to build a legacy and know that you’ve contributed to making the world a better place.
A very significant area to get under control is your children’s future. If your family includes minor children, you need a will that names a legal guardian should something happen to you and their other parent is no longer able to care for them. You don’t want someone else making this decision…like a judge who doesn’t know your family situation.
In addition to guardianship, you can also appoint someone who will be in charge of finances for your children. This can be constructed in any creative way you want based on the assets in your estate and the timing you want these assets to be distributed to your children. There is no “right” answer with this…it is a personal decision you get to make and have carried out as you wish.
Another area that is sometimes overlooked has to do with your “furry kids,” your pets. You can also choose a guardian for them with very specific descriptions of how you want them to be cared for after you are gone. Many pets end up in animal shelters because no one in the family can take care of them and no provisions were made for their care. You can also establish a pet trust so money for their care is provided to their future owners.
These are just a few of the many areas that you can control while you are here and set in motion when you pass away. But the most important thing to remember is to DO IT EARLY AND UPDATE FREQUENTLY. This is probably the best advice I can give anyone, regardless of where they are in life. Creating your will is just the first step. Then it needs to be updated as your circumstances and laws change. Many people update wills after a “trigger” event, such as marriage, birth, death or divorce. However, laws and assets change and so does your estate plan, especially after major tax law changes.
The will is just the beginning of an estate plan. While it may be the cornerstone of your plan, setting up trusts and defining how you want things to be handled is the majority of what makes up a truly functioning estate plan.
There are several other documents you will also want to have in place to protect you while you are alive and after you have passed. Some of these include the durable financial power of attorney, which determines who can make financial decisions on your behalf, if you are ill and cannot do so. You will also want an advance healthcare directive, which includes a healthcare power of attorney. That’s a person who can make healthcare decisions on your behalf should you be unable. It is also a good idea to have a living will to explain what you want with regards to staying alive through artificial means.
Finally, accounts where you have named a beneficiary should be reviewed periodically. The beneficiary designations appear in accounts like IRAs, 401(k)s, bank and investment accounts, to name a few. The designation supersedes anything in your estate plan so you want to make sure you know what these are and update them as life changes.
So you can now see why it is so critical for EVERYONE to have an estate plan in place, regardless of where you are in life. The only thing that changes will be the details, which is why you want to review it on an annual basis as life changes. Set up a meeting today with your estate planning attorney, it will give you much more peace of mind and hake a load off your mind.