Estate Planning Basics
Businessman Warren Buffet remarked, “Someone is sitting in the shade today because someone planted a tree a long time ago.” One of the most thoughtful and considerate things we can do for our loved ones is to take care of our estate planning.
Here are four basic legal documents that can help you protect resources, provide solutions, and prevent problems for your loved ones down the road.
1) A Will- Since you can’t take it with you, a will instructs those you leave behind what to do with your stuff upon your death. You may think nobody will want your stuff but think again. Often it is the things of sentimental value that loved ones fight over. Leaving them a will is a way to provide clarity and understanding.
Even more important, a will designates a guardian in the tragic event of the loss of a mother or father of young children. If you have young kids, you should have a will. This helps lessen uncertainty and confusion during a difficult, heart-wrenching time.
2) A Living Trust- A trust provides a way for you to pass your property on to your beneficiaries while eliminating the time and expense of the probate court process, which can easily cost $5000 and often much more. (If you are curious to know more about probate, do a "Google" search for "Prince's Probate".)
A living trust is particularly helpful if you own a home or other real estate, which would have to go through probate otherwise. It lets you continue to use, control, and enjoy the property you transfer to it. Unlike a probated will, a trust is a private document that keeps private things private. In situations where death taxes could come into play, a trust can also help reduce that burden.
3) Durable Power of Attorney (POA)- If injury or illness leaves you unable to take care of your finances and property, a person you appoint through a durable POA can do so for you. This way the bills get paid and property is cared for. It is effective while you are alive but incapacitated. The person you choose should be someone who is trustworthy and has your best interests at heart. Appointing someone who is good at managing finances is a plus.
4) Health Care Power of Attorney & Medical Directive- If you have spent any time in a hospital you have certainly been asked if you have this document. You authorize a person to make health care decisions for you if you are unable to (e.g. you are unconscious or not thinking clearly). The person you select to make health care decisions for you should be someone who loves you dearly but can be level-headed in an end-of-life crisis. This gains special importance as we age. Up to 25% of the population in the U.S. currently cares for an elderly parent full or part time. This number is increasing steadily as baby-boomers get older.
You can indicate your wishes regarding the use of artificial life-support to keep you alive. Do you want your life prolonged? Do you want pain medication to be administered? These and other questions are addressed.
You don’t always know what the future holds but you can prepare. Creating and using these documents can be extremely helpful for you and your family in many ways. You may be a DIY type but as a lawyer I always recommend you talk with one to make sure things are done properly. It is kind of like surgery. Yes, you possibly could do it on your own but do you want to?