Estate planning is meant to prepare you and your family for the chance of incapacity and for death. There are a variety of estate planning tools that can be used, depending on the specific goals of your estate plan.
Purpose No. 1: Planning for possible incapacity
Incapacity can be caused by either a physical or mental condition. The notion of incapacity, in a legal sense, refers to the ability to understand the nature of consequences of legal proceedings. However, when you are dealing with estate planning issues, incapacity refers to a person’s ability to manage their own affairs and make decisions on their own. Therefore, incapacity could also be physical in nature if you are no longer able to take care of your own affairs. Without an estate plan that deals with incapacity, you may end up being appointed a court-supervised conservator or guardian.
Advance Medical Directives are used for incapacity planning
An Advance Medical Directive is a legal document that allows you to delegate medical care and treatment related decisions to someone else, in the event you are not able to make those decisions for yourself. This estate planning tool allows you to select someone to manage your medical decisions for you. Advance Medical Directives are created so that they take effect even in cases of temporary incapacity.
Using a Financial Power of Attorney for incapacity planning
In addition to medical decisions, incapacity may also require assistance in handling financial matters as well. For this type of assistance, you should have a Financial Power of Attorney. This estate planning tool allows you to select someone you trust to manage your financial affairs.
Purpose No. 2: Planning for your death
The other purpose of estate planning is to plan for how your estate will be handled after your death. One of the primary estate planning instruments that addresses what should be done after your death is the Last Will and Testament. A Will is basically written instructions on how you want your estate to be distributed after you die. A Will can also allow you to nominate a guardian for your children, should you pass away while they are still minors. One disadvantage of a will is that the property will go through probate before your assets can be distributed.
What is involved in basic estate planning
Estate planning involves simply creating an advance plan naming those individuals you want to receive your property when you die. Proper estate planning should also be able to do the following:
- Include instructions for your care if you become disabled or incapacitated before your death,
- Select a guardian and manager for the inheritance of minor children,
- Provide for loved ones with special needs while preserving eligibility for government benefits
- Provide for loved ones who may need assistance managing money or who may need protection from creditors
- Include life insurance policies for your surviving family, disability income insurance if you become unable to work, and long-term care insurance to assist in financing your medical care in case of an extended illness or injury.
The time to create your estate plan is now
Many clients delay creating an estate plan because they think they are too young to need it or they don’t have enough assets to worry about it. Yet, in reality, we cannot predict how long we have to live, or whether we will suffer from an illness or accident that leaves us incapacitated. For that reason, estate planning should be a priority sooner rather than later. Once disaster strikes or the unexpected happens, it may be too late. The families of clients who don’t plan ahead are left to pick up the pieces, often without any idea how to start.
Estate planning can be very affordable
If the prospect of proper estate planning seems too expensive or overwhelming, you can always begin with a simple initial plan and add to it as appropriate. This is especially true for single individuals or young families. A smaller family dynamic may only need a will, term life insurance, and powers of attorney for assets and health care decisions. As your needs and the needs of your family change, you can always develop your plan as necessary. An experienced estate planning attorney will be more than capable of providing the necessary guidance and peace of mind you will need to guarantee you and your family will be provided for in the future.