Don’t believe you need an estate plan?
An estate plan is a powerful tool for many purposes
Estate planning can mean many things to many people. For some, it may simply mean the creation of wills or trusts and other financial instruments that can allow them to transfer wealth to their children and grandchildren.
For others, it may involve the creation of a special needs trust, to build a safety net for a child with developmental disabilities and to ensure they have their future financial needs taken care of.
And many people are concerned over the prospect of paying for long-term care or nursing home care and fear that should Alzheimer’s, a stroke or some other calamity occur, they could lose their home and their life savings.
Estate planning can do all of that and more. For many, the prospect of estate planning is somewhat off-putting. They may feel they are not in need of “elder law services” and they have many years before they should worry about such matters.
Do young couples need an estate plan?
In fact, estate planning is best done while you are young, and you have the flexibility to make changes in your saving, investing and planning timelines. It can show you how to save for your children’s education or your own retirement.
Many people want to retire “someday,” but that someday remains a vague notion in some far future, a calendar date that is so distant that they cannot grasp it as being real. And that kind of distance tends to reduce the interest in taking action.
The value of creating an estate plan today is that it can make that “someday” real. It can provide both a genuine incentive for altering your spending and saving habits and a means of focusing and honing the parts of your plan to be more effective.
Having a will should be a necessity. If you do not have one, then your assets may pass under the laws of intestacy, which may not be how you wanted the assets distributed. By creating a will, you can identify, among other things: who receives your assets; how much they receive; when they receive it; who will serve as your executor or trustee. It can ensure the orderly transfer of your estate as you want it, and can help to minimize potential disputes among your family members.
Medical and Advance Healthcare Directives
Medical durable powers of attorney and an advance healthcare directive (sometimes still known as a “living will”) are valuable parts of any estate plan. Not only do they provide peace of mind for you, in that you have designated individuals you trust to make medical decisions for you if you are unable to do so, but they can also reduce the stress that your spouse or children would encounter not knowing your intentions concerning medical care and treatment.
An estate plan should also include a financial durable power of attorney in which you have identified who can make decisions for you should you become incapacitated. Absent a financial power of attorney, it may be necessary to obtain a court-ordered conservatorship, which can be quite costly.
An examination of your finances when creating an estate plan may also show where you may need to alter a savings strategy or change your asset mix, and provide a basis for asset planning that could minimize the adverse effect of taxes. You may even determine you can avoid probate, saving the time and expense of that process.
The future will come, planned or not
While predicting the future is inherently risky, what is far more risky is to assume that things will be okay and will work out. Having a comprehensive estate plan in place before difficulties arise can prevent the need for crisis management. The information that is assembled in this plan can be used to change your focus and successfully deal with whatever difficulties appear.
If you and your spouse’s health remain robust, there may be elements of your plan that are never used. You may never need to use long-term care insurance or have to deal with Medicaid benefits, but having an estate plan ready to deal with both the good times and the bad, provides comfort today and in the future.