Estate Planning is for every season of adulthood

It took many posts in this blog, but we finally got to the heart of why I really started this blog.  I was amazed by how many friends and family did not have a will or did any estate planning.  If you can believe it – several of them even had kids!  That means – they had not planned who would be the legal guardian for their children if something catastrophic happened to them.

My husband and I don’t have kids, but we created a will / trust soon after we were married.  I was amazed by how many people I spoke to didn’t have any of these things.  Very shocking – but some people just don’t plan – whether saving for retirement or what will happen when they pass away.  This post is to help you do that.

What is Estate Planning?

Estate planning is the process by which an individual or family arranges the transfer of assets in anticipation of death.  An estate plan aims to preserve the maximum amount of wealth possible for the intended beneficiaries and flexibility for the individual prior to death.  In essence – when you die – who (and how) should your assets be distributed?   

Resource Tip: Read more in this article: What is Estate Planning?

Benefits to having a good estate plan:   

• Minimize estate taxes and legal fees
• Simplify and streamline the probate process – the legal process of distributing a person’s assets and settling their debts after they pass away
• Choose a guardian for your minor children
• Choose beneficiaries to receive your assets
• Make health care decisions in advance
• Lessen the stress on family during a difficult time

It might be daunting to start, but there are several key decisions to make. 

Components of a proper estate plan

• Create a will
• Establish a living trust
• Create powers of attorney
• Prepare an advance health care directive
• Designate your beneficiaries
• Plan for (and pay) your funeral or memorial service

A will allows you to specify “who” (i.e. beneficiaries) should inherit your assets after you pass away.  You can also specify who should be named guardian of any minor children.  A revocable living trust is a legal instrument that lets you distribute your assets after you die.  This document helps avoid costs / time in probate. 

A living will sets a directive on how decisions are made about your medical care if you’re unable to make that decision yourself.  You choose a medical power of attorney (often – your spouse).  Scenario: If I am in an accident and unconscious, my husband has power of attorney to make the decisions.  If he is in the accident with me, the decision reverts to our parents.  If our parents are in the accident with us – it reverts to siblings, etc.  You get where I am going.  You must have a long succession of powers of attorney – for medical and financial reasons.

Questions to ponder

Ensure all your powers of attorney know your wishes and plans. 

• Do you wish to be on life support? 
• Should heroic measures be made to resuscitate once you reach a certain point in life?
• Should you be buried or cremated? 
• Do you wish for a memorial or funeral? 

My recommendation is to include funeral instructions / wishes (and even pay for them ahead of time) – thereby, lessening the strain on loved ones.

If you’re saying to yourself – “I don’t need a will” or “I don’t want to waste money on hiring a lawyer to prepare this” – that’s fine.  But be prepared to accept the consequences and put your loved ones through the hassle of not having one.  If you die without a plan, your state will decide what happens to your assets based on intestate succession laws.  These laws will determine who will receive your assets and become legal guardian of your children.  Your loved ones will not be able to change who receives what.  Is that hassle worth a few hundred dollars?  The answer is NO!

Maintenance of Estate Planning

How often do you need to update these documents?  Only for major life changes.  Did you become divorced / widowed / have another child?  Those might be life changes that warrant an update.  My friends recently changed their power of attorney when their oldest child became an adult.  She removed her brother as the legal guardian of her young children and set her oldest child as the new legal guardian.

Other situations that might warrant a change:

• Marriage / Divorce / Relocation / Birth of a child
• Did you roll over a retirement plan?
• Did you receive an inheritance?
• Have the tax laws changed?
• Did you buy real estate in another state?
• Are there any changes to individuals who you have named in your Estate Plan?  Are they still pertinent?

Every 3-5 years – regardless – you should look at documents and make sure they are still relevant and sensible.

Resource Tip: For detailed checklists, I highly recommend the following articles:

• The Ultimate Estate Planning Checklist: A Step-by-Step Guide
• Estate Planning Checklist

In prior posts, I’ve stressed the importance of being organized and storing important information where your loved ones can find them.  Your estate plan is one such document.  Be sure you know where it is – as do your loved ones.  Where are your insurance policies and financial information stored?  Where are your proof of identity documents?  Where are all the titles and property deeds?

Having a carefully crafted estate plan in place before you die (or can no longer make decisions for yourself) goes beyond a “who gets what” set of instructions.  Having total control over how that process plays out is valuable.  It puts your affairs in order, so you have peace of mind knowing your loved ones can carry out your wishes once you are gone.  It’s an uncomfortable and depressing conversation to have, but one that must be done.