Estate planning is uncomfortable. It’s also very personal and should be as unique as you. While there are never two people whose needs are identical, an experienced estate planning lawyer can ensure every need for every client is met. Not only that, but when it comes right down to it, it’s less about you and more about protecting loved ones and putting into place necessary mechanisms for your assets to pass to those you choose. Of course, retirement planning plays a role and that is indeed about planning for your own future, but if you’re not familiar with estate planning as a whole, this is the article for you. Everyone’s needs are different, but there are a few common denominators that are present in most estate planning documents.
Why Do You Even Need Estate Planning?
There are many who assume their wealth isn’t enough to justify a proper estate plan. Nothing could be further from the truth. You may not have to worry about the $5 million estate tax, but if you have a family and assets, you need some degree of estate planning. This important type of planning will help your loved ones avoid a lengthy and overwhelming legal process should you become incapacitated. The small investment you make now can save your loved ones thousands in legal bills should a guardianship be required by the courts if you don’t already have those plans in place – and really, that’s just the tip of the iceberg.
Your Last Will
Many of our clients wonder if a will or a trust is better suited for their needs. The simple answer is it comes down to your finances. They both will help route your cash and assets, but if you have a considerable amount of cash, to the extent that there are tax considerations, a trust might be a better overall solution. Do you have a special needs child or adult child? A living trust can help protect his or her future and put into place the necessary money to cover the child’s future needs while also reducing your tax burden.
Look at it this way: a trust is quite specific in its purpose while a will is a traditional and effective way to cover the other assets, such as your personal property. It’s not unheard of for a client to have both and in fact, there are instances when it’s recommended.
Finally, don’t underestimate the power of a will. If you die in intestate, which means you die without a will, state law determines where your assets go.
Documents Used if You’re Unable to Speak for Yourself
Incapacity documents, as they’re sometimes referred, allow you to name one or more people to handle your financial and medical decisions. A healthcare directive or medical power of attorney allows you to name someone to make those important medical decisions should you become incapacitated. Meanwhile, a living will provides the specifics on how far you wish the marvels of medicine to go to save you. These are the documents that will require you to define your own version of “quality of life”.
A financial power of attorney serves the same role, except your named power of attorney will be making financial decisions. Remember, this person will have the power to access your bank accounts, sell property, make decisions regarding your retirement accounts and handle any other financial considerations you have. Choose wisely.
These documents provide the frame for your estate planning. What you need today may be different than what you need in a few years. Once you have the foundation in place, making those changes as your life evolves will be much easier. If you’d like to learn more about the importance of estate planning – and trust us, it’s never too soon – we invite you to contact our office for a complementary consultation.
- Top 5 VA Benefits - April 9, 2021
- 5 Things You Should Know about Medicaid - April 1, 2021
- Beneficiary Designations and the SECURE Act: Eligible Designated Beneficiaries - March 31, 2021
