It may seem low, but only about 33 percent of adults in the United States have any estate planning documents such as a will or trust. This is due, in part, to many people mistakenly believing that estate planning is not necessary because they do not have many assets.
Why should you have an estate plan?
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 or incapacitated, and that your money and property is inherited according to your wishes.
What key elements of an estate plan should you consider?
- 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, may end up charge of 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 (opening or closing 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.
- Do you have an advance directive? Also called a living will, an advance directive 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. This further gives your loved ones peace of mind and protects family unity by relieve your family members of that responsibility.
- 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.
- Are your assets and documents organized? Compile a list of all of your accounts and other important information that may be needed to manage your accounts and property while you are incapacitated or to settle your affairs after you are gone. Make this information available to trusted family members or other loved ones. This list should include information such as bank and investment accounts, titles to vehicles and homes, credit card accounts or loans, digital accounts (such as Facebook, LinkedIn, and Twitter) and passwords as well as copies of your Social Security card, passport, and birth certificate.
- What other information will your family need? 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.
How can you encourage your loved ones to create an estate plan?
Estate planning is often a difficult topic because it brings the unpleasant topics of aging and death to the forefront of our minds. Here are a few tips to help you start the conversation.
- Be sensitive to your loved ones’ feelings. Put yourself in their shoes and keep in mind that few people are eager to dwell on the subject of their own death. One way to begin the conversation is to talk first about the need to plan for an illness and to provide instructions in the event they become too ill to communicate with doctors or handle financial matters for themselves. The conversation can then progress naturally to the importance of having an estate plan that will transfer their money and property in the way that they wish, provide for the care of any dependents or pets, and minimize any taxes, court costs, and legal fees. Communicate that you are not trying to control their decisions but only want to ensure that their own wishes regarding their medical care and property are known—and that all of their instructions are in writing to guarantee that they are carried out.
- Involve others in the conversation. If you are planning to speak to your parents about the need for an estate plan, try to include any siblings in the discussion to avoid giving the impression that you are attempting to influence or control your parents’ choices. You and your siblings should emphasize to your parents that none of you is asking about what you will inherit, but rather just want to make sure that their wishes are carried out if they become ill or pass away.
- Consult an estate planning attorney. An experienced estate planning attorney can help you and your loved ones create an estate plan tailored to meet each of your unique needs and carry out your wishes, or they can assist with updating an existing estate plan. We can provide each person with guidance and information about the options available to them, with all discussions remaining confidential. 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. In addition, the guidance we offer will give you and your loved ones the peace of mind that comes with knowing that plans are in place for your care if any of you become ill and that your wishes will be honored when you pass away.
Don’t delay in setting up a meeting. We offer free consultations and again, all communications are 100% confidential.