If you switch the term “estate” for “stuff,” maybe you’ll have a better idea of why you need to have an estate plan. It’s so you can have a legally enforceable plan for your stuff. Estate planning is not just for millionaires and billionaires, says the Hawaii Reporter in the article “Wills and Trusts for the Rest of Us.” After all, it’s not just millionaires and billionaires who die.
There are questions that everyone needs to have an answer to:
- Who do I want to make medical and financial decisions for me, when I can no longer do so for myself?
- Who do I want to care for my minor children or my dependent elderly parents, when I am gone?
- Who do I want to have my earthly possessions, no matter how many or how few?
Even if all you have is a car and some furniture, you will want to decide who gets those and not leave it up to a stranger.
Having a will properly prepared by an estate planning attorney, is one of the most important things you can do as a parent. If you have dependents, whether they are children or adults, you need to have a plan in place for their care, in the event you pass away before they do. That plan is the most basic part of an estate plan: a will.
Without it, your dependents will become wards of the state. The state will decide what happens to your children or adult dependents.
Trusts are not just for rich kids. A revocable living trust is a document used as a secure and easy way to have your “stuff” move from you to your beneficiaries, without them having to be subject to probate. With a trust, you get to decide who gets what through the trust, and can even control when they receive an inheritance. You can make the distribution dependent upon completing an important task, like finishing college, or reaching a certain age.
A home or a car can also be placed in a trust, with an heir named as the beneficiary of that trust. You can continue to use all of the things that are in a trust, while you are living. However, whatever is placed in a trust will automatically transfer to the person you name as a beneficiary of the trust.
For medical and financial decisions, everyone over the age of 18 needs a Power of Attorney designating a person to make decisions for them, in case of incapacity. For medical decisions, you should have a healthcare Power of Attorney. You should also have a document stating your wishes, in the case of a critical illness or injury that clarifies what kind of end-of-life care you want. This is known as a Living Will in some states and an Advance Directive in others.
An estate planning attorney can help you create a plan for you want to happen in the case of incapacity and in the case of death. One is reasonably likely to occur and the other is a definite. Being prepared is the best thing you can do for yourself and your loved ones, no matter how much “stuff” you have.
Reference: Hawaii Reporter (September 28, 2019) “Wills and Trusts for the Rest of Us.”
Suggested Key Terms: Estate Plan, Estate Planning Attorney, Trusts, Assets, Beneficiaries, Incapacity, Inheritance