It is no secret that most of us do not have an estate plan. In fact, recent studies have shown about two-thirds of us do not have one. Some people figure that an estate plan can only help after they are gone, so they don’t think they need to worry about it. In reality, there is more to estate planning than that.
Why plan your estate?
An estate plan should plan for everything after you pass. It designates who controls your estate, how it should be disbursed, your funeral and burial wishes, who gets what, etc. Without an estate plan, you family will be left scrambling to figure out what you wanted, how to pay for things, how to access your accounts and more. Worse yet, squabbles over these issues can fracture family members’ relationships for the remainder of their lives.
How do estate plans affect my life?
Estate plans are also for you while you are alive. Trusts can be used to protect your wealth while you qualify for state and federal benefits. Estate plans are also important for incapacity planning. It can be critical to have a plan for what will happen should you one day become unable to make decisions for yourself due to illness or sudden injury.
How do I make an incapacity plan?
The first step to making an incapacity plan is outlining what is part of your life now. How do you pay your bills? What bills need to be paid? What accounts hold your funds? Do you have incapacity insurance? While not an exhaustive list, these are all questions you will need to answer for your incapacity plan. The idea is to empower someone with the knowledge needed to run your life while you are incapacitated however you want it run.
Do not forget your medical wishes
In addition to identifying how to keep your financial well-being together, think about your medical wishes. Identify what medical procedures you do not want. How long do you want to be kept on life support? Do you want your organs donated? Make sure your estate plan includes this information.
Select people you trust
Through a power of attorney, you can designate one or more people to make these decisions for you. You can name one person to handle your finances, another to make your medical decisions (a healthcare proxy) or the same person for both. You need an official power of attorney though because many companies will not allow anyone other than the account holder to access an account.