Did you know everyone has an Estate? Even you! Did you know YOU will have the power to say what happens to your estate even after you’re no longer living? You DO, and everyone, regardless of wealth amount, should have a plan in place for the final settlement of their estate.
Most people hear the word “estate” and think of mansions with horse barns and tennis courts. While this isn’t incorrect, it doesn’t describe estates in their most basic form. We all have estates, whether we own tennis courts or not! Estates encompass all assets one owns – homes, cars, financial portfolios, etc. and it’s important to be planning for the outcome of one’s estate in case of incapacitation or death.
Estate planning is a map to one’s finances for family to follow should you become unable to manage them yourself. These plans preserve your assets and provide for loved ones, and without a plan, control is relinquished to the state. Many times, families will have to settle estates when emotions are heightened and when a plan isn’t present, wishes for the estate become unclear and disputes between family members can ensue.
Estate planning should include details upon death, but also for incapacity. Incapacity describes a condition in which you are legally unable to make your own decisions. We like to discuss planning for incapacity first because this could happen to anyone at any time. Consider if you were to become the victim of an accident that puts you in a coma for several months. How would your doctor know what medical treatments you would want or not want if you can’t speak for yourself? In these instances, family members must scramble to obtain legal permission to make decisions, which would require going to court each time permission is needed. This can become quite burdensome. Incapacity plans include health-care directives, as well as property management for clarity on how your home is to be taken care of.
The four most important items to consider when developing an estate plan are:
- Wills: Creating a will should be the first item on your Estate Plan “to-do” list. This document will tell your family exactly how you’d like for your assets and belongings to be distributed upon incapacitation or death. This single document eliminates confusion among family members during a difficult time.
- Beneficiary designations: keeping an updated account of who should receive retirement savings or insurance policies insures your money will be delegated properly after you’re gone.
- Health Care directives: Estate planning does not just apply to death – it can cover wishes for incapacitation as well. Do you wish to be on life support? Is there a specific family member to whom you’d like to delegate health decisions on your behalf? If you are unable to make decisions for yourself, Estate Planning helps to make your wishes clear.
- Power of Attorney: Should you become disabled or incapacitated, having someone to make your financial decisions on your behalf is important. This person is given “power of attorney” and they should be someone you trust to handle financial matters.