Friday, September 28, 2012

Why Everyone (Yes, Even You) Should Consider Estate Planning

Benjamin Franklin famously stated, “in this world nothing can be said to be certain, except death and taxes.” While taxes may be unavoidable, proper estate planning can at least help prepare for the inevitability of death and illness. While the prospect of considering these subjects may be uncomfortable, an hour or two spent making decisions today can avoid confusion and conflict in the event that tragedy befalls you and your loved ones.
Estate planning allows us to state specifically whom we want to make decisions for us in the event of incapacity or death and how we want our assets to be used, rather than our loved ones having to guess at what we would have wanted. There is a misconception that estate planning is only for the wealthy who want to control their fortunes from beyond the grave. While one part of estate planning is the documents expressing your post-mortem wishes, those documents are only a portion of the whole process. Estate planning creates your blueprint for taking care of yourself and the ones you love in those hardest of times. By taking the time to work with an attorney to draft your estate plan, you ensure that should the unthinkable happen, your loved ones will be able to look out for your interests, respect your wishes, and in the worst of situations inherit your property with as little trouble as possible.
Two important documents in the estate plan are the Durable Power of Attorney and the Patient Advocate Designation. These two documents allow an individual to appoint others to make decisions for them in the event of sickness or incapacity. This ability is important because it allows a trusted family member or friend to make immediate financial, legal, and medical decisions if you become incapacitated, rather than having to go through a court process.
The Durable Power of Attorney names a person who, upon your incapacity, has the authority to deal with your financial well-being. This means that if you are incapacitated there is a person who can arrange for payment of bills, file insurance claims and lawsuits, and handle other business matters on your behalf.
The Patient Advocate Designation is similar except that it appoints a person to make medical decisions on your behalf. This authority is important because once a person reaches the age of eighteen doctors can, but are not required to, listen to the wishes of a parent or spouse in making medical decisions when a patient is unable to make decisions for themselves. A Patient Advocate Designation ensures that your spouse, parent, partner, or trusted friend has the legal authority to enforce your desires when it comes to medical treatment.
While the Patient Advocate Designation allows your surrogate to enforce your wishes for the medical treatment, a document called the Living Will provides guidance as to those wishes.  Through a Living Will, a person defines the scope of care they wish doctors to employ to sustain their life.
The Will and Trust are documents that serve to enforce your asset distribution wishes after your death. Used together, a Will and Trust create an agreement, which can last many years, that names people to make important decisions and distribute the person’s assets over time and frequently in a more financially beneficial manner. The differences between a Will and  a Trust, as well as how they work together, will be discussed in greater detail in future blogs.
Before you decide that you do not have enough assets to worry about a Will and/or Trust, consider a few important factors.
  • If you do not have a Will, State law imposes a default Will on your assets. Who would you rather control the disposition of your estate, you or the State Legislature? 
  • Do you own a house? Even a mortgaged home is an asset to pass on to someone or to sell to add to the total value of the estate. 
  • Do you have a life insurance benefit or retirement accounts with your employer? While your savings may be limited, any life insurance benefit creates a sudden influx of assets to an estate and you will want to decide how to disburse these funds. 
  • Do you have children? This by far is the strongest motivation for having a Will and Trust. Those documents allow you to appoint Guardians you are comfortable with to raise you children and ensure that any assets you can pass along to your children are used to their greatest advantage.
As you can see, there is much more to estate planning than determining who gets your money when you die. Take the time to consider what is best for you and your loved ones, and then make an appointment to speak with an estate-planning attorney. That attorney should take the time to answer all of your questions and explain in more detail the documents discussed in this article. Take their advice to heart, because that attorney is a person you will build a life-long relationship with and when unfortunate circumstances arise, will be there to assist and guide you and your loved ones through those difficult times. 

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