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When Should You Begin Your Estate Planning?
Estate Planning
is not just for the rich or the elderly. The word “estate” often conjures up images of a stately mansion surrounded by acres of private land. But even a small home or personal items within a rented condo make up an estate. By definition, an estate is “all the money and property owned by a particular person, especially at death.”
It doesn’t matter how many assets you have or what they are worth because estate planning is about taking control and avoiding heartache and aggravation for loved ones should the unexpected happen.
Unfortunately, tragedy can strike at any time – even at a young age. You can be hit by a car or diagnosed with a terminal illness. If you don’t plan for those possibilities, you could be hurting yourself and your loved ones such as your spouse or partner, and especially your children.
Discussing what would happen should tragedy or the unexpected happen can be difficult, but it’s nothing compared to the difficulties your loved ones would face if something happens to you, and you do not have an estate plan in place. Estate planning helps ensure that those you leave behind can grieve without the worry of how to handle your estate and it allows you – not the state - to control what happens to your property.
An estate plan does not have to be complicated or costly, but once you become and adult at age 18 you should consider drafting an estate plan. Here is why.
Who Do You Want To Receive Your
Property?
A Will allows you to choose who receives the rest of your assets. For example, if you have a vinyl collection that you want your best friend to have, you can put that into the Will. Or maybe you want to make sure that your little brother gets your car if something happens to you.
Once you have children, a Will also allows you to name a guardian for your children should something happen to you and the other parent.
Should you you die without having drafted a Will, the state decides who receives your assets.
Also, when you get your first job you may receive benefits such as a 401(k) or a life insurance policy. Naming a beneficiary on each of those accounts ensures that money goes where you want it to if something were to happen to you. You can name an individual (such as a parent or spouse) or an entity (such as a nonprofit) as the beneficiary.
It is important to note that insurance policies and retirement accounts are not typically covered in a will, so naming a beneficiary on each account and policy is crucial.
Who Do You Want Making
Financial and Medical Decisions on Your Behalf?
Estate Planning also involves determining who you trust to make financial and medical decisions for you.
In a Durable Power of Attorney (POA) you legally appoint someone as your Agent to handle your financial affairs. You determine how much or how little the Agent can do on your behalf. It does not take a severe injury to create a need for a POA. For example, if you decide to study abroad, a POA can file your taxes and help with other financial matters on your behalf. Most importantly for married couples, a properly drawn POA gives one spouse the ability to protect as many assets as possible should the other spouse need to go into a nursing home.
Many people do not realize that once they become an adult at 18 years old, their parents are no longer automatically permitted to make medical decisions for them– even if there is an accident and the person is unable to make decisions for themselves. Most importantly, just because someone is your parent or, even your spouse, it does not mean they are legally permitted to be given medical information without permission.
In a Health Care Power of Attorney (HCPOA), you are legally designating someone as your Health Care Agent (whether it’s a parent or a spouse) that can be given medical information and make health care decisions for you if you are unable to do so yourself. For example, if you are in an accident that renders you unconscious or under anesthesia for scheduled surgery and a complication arises, your HCPOA would allow your agent to make medical decisions for you based on your instructions.
What Life-Sustaining Medical Treatment Do You Want If there is No Realistic Hope of Your Recovery?
What Life-Sustaining Medical Treatment Do You Want If there is No Realistic Hope of Your Recovery?
This may be one of the most difficult – but also most important – questions you will ever answer. Within your HCPOA there should be a section stating your wishes as to what should or should not be done if you are permanently unconscious with no significant hope of recovery, in an irreversible coma and/or in a persistent vegetative state. The language is often called a “Living Will” or “Advance Directive”.
Typically, it answers questions such as…
• What do you want to happen if you can no longer feed yourself or breathe on your own?
• Do you want a Do Not Resuscitate (DNR) or a Do Not Intubate (DNI)?
• Do you want to allow your body or organs to be donated?
What’s Next?
An experienced estate planning attorney can ensure that your wishes are followed and that your beneficiaries – not the government – receive as much of your estate as possible. As your life becomes more complicated – you buy a house, you have children, you open your own business, etc. – you will need to revise your estate plan. Give us a call at 610.374.8377
or find us online.
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