Most of us are not very keen on considering a future beyond our own lifetime. Many people spend more time planning a vacation than they do thinking about who will inherit their assets after they pass away. Although estate planning isn’t an enjoyable activity, without it, you don’t get to direct who gets everything for which you've worked so hard. Forbes' article, "10 Estate Planning Myths You Shouldn’t Believe," explains that a common misconception about estate planning is that only wealthy people need to use it. Estate planning is actually for everyone, from the wealthy to the average American, beginning at age 18. Learn why you should have an estate plan to avoid potentially devastating results.
In addition to busy lives and plain-old procrastination, another common notion of more than 50% of all Americans who do not have a will is that they don’t need one. Most of us do not have millions of dollars or complex business interests like the rich and famous. Therefore, we think that estate planning is a bit much for our comparatively simple financial situations. However, estate planning isn't just for the rich. If we learned anything from the Covid pandemic, you can’t predict the future. However, you can prepare for it.
Age 18 is the start of legal adulthood. Once this happens, parents no longer have the same legal rights and privileges as when their children were minors. Estate planning can help give parents legal standing on behalf of their children, when needed. If you’re married, have children, or own property, a will drafted by an experienced estate planning attorney also lets you decide how your assets will be distributed upon your death. Additional planning documents or strategies can also help ensure that you decide what will happen to you or your property if you become incapacitated.
Estate planning may have been once considered something only rich people needed. However, that's changed. Every adult needs to plan for when something happens to a family's breadwinner(s). The primary part of estate planning is naming heirs for your assets. If you die without a will or “intestate,” state law and the probate court will decide who will receive your property.
Everyone should consider what would happen in the event of an accident or incapacity. Furthermore, if you are the parent of small children, you must have a will to ensure that your children are cared for. You can designate their guardians if both parents die before the children turn 18. A judge will decide this important issue without a will and guardianship clause.
Having estate planning documents like a financial power of attorney for protection during unforeseeable situations isn't just for the wealthy. If you've named an agent to make decisions on your behalf, you protect yourself from having the courts appoint a guardian to oversee your finances.
Another misconception many people have is that their spouse or partner could make decisions about medical care or speak with their doctors, if needed. However, state and federal laws like HIPAA protect an individual's health information and require legal documentation to authorize sharing it.
A medical power of attorney is a legal document that allows you to appoint someone to make medical decisions on your behalf if you become incapacitated. This person, often called your health care agent, will have the authority to make healthcare decisions and ensure that your wishes are respected.
Planning ahead can also address any number of possibilities that need careful consideration, like end-of-life care and whether you would like to remain on life support if in a vegetative state.
One sibling may believe she deserves more than another. This type of fighting can turn ugly and end up in court. When family members and others with a claim to a deceased person's property contest an estate, it pits family members against each other. In fact, the reputation of many dead rich and famous people extends long after they are gone due to extremely public, expensive and lengthy court estate battles.
However, an estate plan enables you to designate the methods for transferring assets after you pass away. It also will go a long way towards settling any family conflict and ensuring that your assets are handled as you want.
Regardless of your net worth, estate planning is a process that ensures that your assets are distributed according to the way you wish after you pass away. An estate plan also provides instructions about how you will pay for your debts, final arrangements and even your medical care if you become incapacitated. Proper estate planning ensures that the people and charities you support now will be supported even after you are gone in the most tax-efficient way while avoiding family strife.
If you’re ready to learn more about creating an estate plan, schedule a consultation with our firm.
