A lot of people without estate plans do not take action because they don’t know where to begin. With this in mind, let’s look at five tips that should provide some insight and motivation.
Focus on Your Family
Estate planning can seem like a somber responsibility that is easy to put off, and the years of inaction can start add to up. You may know that you should put a plan in place, but it is easy to convince yourself that there is time to do it later on.
Indeed, you may live a natural lifespan and have the opportunity to take care of it when you are old and gray. However, you never know what the future holds. You probably feel as though you would do anything for your loved ones, so why is estate planning an exception?
When you have a family that is relying on your income, you should definitely carry sufficient life insurance. If you have minor children, you should nominate a guardian and designate a trustee or custodian that would be empowered to manage their inheritances if necessary.
The thought of your loved ones being left in a terrible situation should be enough to motivate you to take action.
Don’t Use a DIY Will
You may be tempted to embrace a so-called “simple solution” when you have a nagging feeling that you should address a responsibility. There are websites that sell boilerplate wills, and you may be convinced that DIY estate planning is the way to go.
A number of years ago, the highly respected publication Consumer Reports conducted a study to gauge the efficacy of do-it-yourself estate planning. After consulting with three legal professors that examined DIY wills, they advised their the readers that these sites cannot match a plan that is constructed by a licensed attorney.
Estate planning involves the eventual transfer of everything that you have accumulated to the people you love the most. This is a profound endeavor, and it should not be taken lightly.
Consider a Living Trust
The revocable living trust is the estate planning device that is ideal for the widest range of people, and it is a great alternative to a simple will. When you have a living trust, you will act as the trustee while you are living, so you retain access to the assets.
In the trust declaration, you name a successor trustee to administer the trust after your death, and your heirs would be the beneficiaries.
You can include spendthrift protections if you have concerns about the money-management capabilities of the beneficiaries. The assets would be protected from their creditors, and you could facilitate limited incremental distributions to curtail their spending ability.
Distributions from a living trust would not be subject to probate, which is a time-consuming and costly process that will unfold if you use a simple will. This alone makes a living trust more effective than a will, and the other benefits seal the deal.
Aside from the financial part of the equation, you should prepare for end-of-life eventualities when you plan your estate. You can state your life support preferences in a living will, and you can add organ and tissue donation choices.
To account for medical decisions that do not involve the use of life-support, you can name a representative in a durable power of attorney for health care. You should add a HIPAA release to give your doctors the freedom to discuss your condition with your health care representative.
If you have a living trust, you can name a disability trustee to assume the role in the event of your incapacity. To account for the management of assets that are not held by a trust, you can empower an agent to act on your behalf in a durable power of attorney for property.
Attend a Free Webinar!
We are conducting a series of webinars over the coming weeks that cover some compelling topics of interest. There is no charge to attend the sessions, so these are some fantastic learning opportunities that you do not want to miss.
You can see the dates and obtain registration information if you visit our Los Angeles estate planning webinar page.