The Importance to You and Your Loved Ones of Having an Estate Plan
The third week of October is National Estate Planning Awareness Week. Even though most Americans view estate planning documents (such as wills and trusts) as very important, only one in three people has them.
Aren’t Estate Plans Only for the Rich?
No. The term “estate plan” sounds fancy, but it is just the way to ensure that your money and property go to the people you want them to and that there is a set of instructions and helpers in place if you become ill or disabled before you die. Of course, an estate plan can help you minimize estate taxation and avoid the costs of probate, too, but its primary purpose is to preserve your choices and your control.
What estate planning documents are the most helpful?
- A will, and often a trust, are the foundation of any estate plan. If you do not have these important documents, state law will determine who will inherit your property—and those might not be the people you would have chosen. Without them, a court, not you, will determine who will be in charge of caring for any minor children or pets and for settling your financial affairs. Clarifying your wishes in a will or trust will help prevent confusion, anxiety, and expense for your loved ones when you are gone.
- Powers of attorney are the next most important documents because they allow trusted people to help when you need them to, whether that is because you become ill, or are travelling. A financial power of attorney designates an individual to make financial and property decisions (such as opening a bank account, signing a deed, getting your mail, etc.) should you become unable to handle any of these matters on your own. A medical power of attorney appoints a trusted person to make medical decisions for you when you are otherwise unable to speak for yourself, and HIPAA authorizations ensure that your loved ones can obtain needed information.
- Although perhaps not necessary if you have a comprehensive medical power of attorney, you might also consider an advance directive, also called a living will, which memorializes your wishes concerning your end-of-life care (such as whether you want to receive life support if you are in a vegetative state or have a terminal condition). Advance directives are more limiting than medical powers of attorney but can be used in conjunction with them to help your loved ones feel secure in the knowledge that they are doing what you would have wanted when they are asked to make hard choices.
What else should be part of your estate plan?
- Insurance – both life insurance and, if possible, long-term care insurance. Having the right amount of coverage is also important in case you become ill and need long-term skilled care and after you die, if you are leaving behind loved ones who rely on your financial support.
- A list of all of your accounts and other important information (such as information about insurance policies) that may be needed to manage your accounts and property while you are incapacitated or to settle your affairs after you are gone. Keep this information in a safe place and share the location only with trusted family members or other loved ones. This list should include at least the following information:
- bank and investment accounts
- titles to vehicles and homes
- credit card accounts or loans
- digital accounts (such as Facebook, LinkedIn, and Twitter) and passwords
- Social Security card, passport, and birth certificate
- A list of legal, financial, and medical professionals you use. The list should include their contact information so your loved ones can easily reach them in the event you or they need the professional’s help.
The experienced estate planning and elder law attorneys at Duncan Galloway Greenwald are here to help guide you through which parts of an estate plan are best for you and your loved one’s needs. Read more about our team and how we can help.