You’ve worked hard during your lifetime.
Countless hours at work. Late nights and weekends. You toiled away to be able to provide for yourself and your family. And along the way you start at the point something aside for your future. Something to retire upon. And wouldn’t it be nice if you had something left to distribute to your loved ones when you’re gone.
Your healthy now. But it’s just common sense that someday you’re going to need somebody else to make decisions for you. Potentially decisions regarding your finances. Or even your health such as major medical decisions.
The thing is, when that day comes they will be too late for you to make your wishes known.
Proper estate planning is all about making sure your wishes come true in the distant future.
It’s about making sure that your lifetime of hard work will benefit you down the road and your loved ones after that. It’s about making sure a guardian is named for your children if they are still young. It’s about directing your loved ones to make the decisions that you would want to have made when you can’t make them for yourself. It’s about selecting the right people to make sure that everything gets done for you when the day comes that you can’t do it for yourself.
The Dangers of Failing to Plan
According to the AARP, only 60% of people over the age of 50 even have basic wills.
Only 45% of people have durable powers of attorney, 30% have health care directives, and only 23% of these people have living trusts.
In other words, the vast majority of people don’t even have the very basic and minimum estate planning documents that they need to plan for the future.
The benefits of a proper plan are numerous. For example, you may be able to minimize or avoid probate entirely with the proper plan.
Through basic planning, married couples can reduce or even eliminate estate taxes by setting up a be trusts as part of their wills or revocable living trusts.
Perhaps most importantly, you can avoid a mess down the road. Choosing someone to be in charge in case you become mentally incapacitated for example can spell out exactly what happens if and when that day comes. Being clear and concise with an estate plan can also minimize the chances of family fights and costly probate court proceedings. Even the best people sometimes get funny when it comes to money. A proper estate planning plan can go a long way to promote family harmony later on.
Minimum Requirements of a Comprehensive Estate Plan
At a minimum a comprehensive estate plan will answer the following questions:
Selecting the Right People: The Fiduciaries
One of the most important decisions that you’ll make with your estate planning is what people do you want to make decisions for you and to make sure that your wishes get administered after you’re gone. We often call these fiduciaries. In the case of a will they are called personal representatives.
You’ll want to have some successor fiduciaries in case the original one is not up to the task or is no longer alive.
You’re going to want to appoint somebody who’s loyal, good person, and has a good sense of money.
Your comprehensive estate plan will likely include some or all of the following legal documents:
You’ll also need to examine the different asset accounts that you have to make sure that there titled in the appropriate way.
Finally, a comprehensive estate plan will make sure to have regular review and checkpoints down the road so that a plan can be amended when appropriate. For example, your relationship with the beneficiaries or even the beneficiary needs may change so that you want to change how you disperse your state. Tax laws change all the time. Changes in tax laws may suggest a different plan might be the most financially beneficial one for you and your beneficiaries.