Why Should I Have an Estate Plan?
In 2008, Congress recognized the need for the public to understand the importance and benefits of estate planning by passing House Resolution 1499, which designated the third week of October as National Estate Planning Awareness Week. Of course, in our firm, every week is Estate Planning Awareness Week! According to a 2021 survey conducted by Caring.com, only 33 percent of adults in the United States have any estate planning documents such as a will or trust, despite the fact that approximately 67 percent of the respondents viewed such documents as somewhat or very important, (1). Many respondents attributed their lack of estate planning to procrastination, but many others indicated a mistaken belief that estate planning is not necessary because they do not have many assets.
An estate plan can provide significant peace of mind by ensuring that your money and property are protected, plans are in place in the event you become ill, and your accounts and property pass down according to your wishes. If you own real property, it will likely get tied up in probate court and the law will make assumptions for you with a last will and testament.
What Are the 5 Components of Estate Planning?
There are a handful of crucial elements that we will lay out for you in this article to help demystify estate planning.
● Do you have a last will and testament or a trust? If you do not have these important documents, state law will determine who will inherit your property—and it may not occur in the way you would have chosen. In addition, someone appointed by the court, instead of a trusted person of your choosing, will oversee caring for any children or pets and winding up your affairs. Spelling out your wishes in a will or trust will also prevent unnecessary confusion, anxiety, and expense for your loved ones when you are gone.
● Are the proper powers of attorney in place? A financial power of attorney designates an individual to make financial and property decisions (e.g., opening a bank account, signing a deed, getting your mail, etc.) should you become unable to handle your own affairs. A medical power of attorney designates a person you trust to make medical decisions for you when you are otherwise unable to speak for yourself.
● Ensure that you have 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.
● Do you have insurance? If you become incapacitated (unable to manage your own affairs) or die, it is important for your family or loved ones to have information about your insurance (such as life, health, disability, long-term care, etc.) so they can file any necessary claims. Having the right amount of coverage is also important in case you become ill or die, leaving behind loved ones who rely on your financial support.
● Compile a list of all of your accounts and other vital information 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 who have performed services for you is also important. 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. You should also have HIPAA authorizations in place with medical professionals to ensure that your loved ones can obtain needed information.
In conclusion, an experienced estate planning attorney, like Margaret, can help you and your loved ones create an estate plan catered to meet each of your unique needs and carry out your wishes, or our firm can assist with updating an existing estate plan. We can provide each person with guidance and information about the options available. Further, we can help each of you put a plan in place that will prevent unnecessary stress, legal expenses, and taxes, as well as uneven inheritances, disputes among loved ones, and delays in passing life savings on to them. The guidance and care we offer will give you and your loved ones the peace of mind that comes with knowing that plans are in place for you if you become ill; and you can feel confident that your wishes will be clear when you pass away.
(1) Daniel Cobb, 2021 Wills and Estate Planning Study, Caring.com.