In today’s 24/7 world, it can seem that there is very little time to pause and consider the future. Yet, this is something that we all need to do in order ensure that our family is protected. Estate planning is not limited to the wealthy, and it encompasses much more than the distribution of one’s assets. There are five important documents that you should consider preparing to ensure your family’s protection; Last Will and Testament, Financial Power of Attorney, Health Care Power of Attorney, Living Will, and Trust.
The Last Will and Testament lays out how assets are to be distributed upon a person’s death. The Will becomes increasingly more important in instances where there is a second marriage. Typically, the Wills of married individuals mirror each other: Husband gives 100% to Wife and Wife gives 100% to Husband. This becomes more complex where one or both spouses have children from prior marriages, a determination needs to be made as to how assets will be divided among the surviving spouse, children of a prior marriage, and children of the current marriage.
A Financial Power of Attorney identifies an individual who may act on our behalf in arranging our affairs in the event we are incapacitated. A Health Care Power of Attorney identifies an individual empowered to make health care decisions on our behalf in the event that we are not capable of doing so for ourselves. On the topic of our medical care, a fourth important document to have prepared is a Living Will. This document identifies an individual’s desire not to be kept alive by artificial means in the event, for example, if one is in a permanently unconscious state. If we feel strongly about not being kept alive by machine assistance it is important that we inform our family members of our intention to avoid any confusion or mental hardship for our loved ones.
The final document that the prudent person should consider is a Trust. The establishment of an unfunded Trust during your lifetime is important for individuals with minor children. If something were to happen to both parents as one-time proper planning would ensure all the assets of the couple (home, bank accounts, retirement accounts, brokerage accounts, and other assets) will be held for the minor children under supervision of the Probate Court until the child reaches age 18.
We all purchase insurance for our homes and cars on an annual basis, we pay the premiums but hope not to collect on the policy. Taking time to engage in Estate Planning is much the same, except we fully expect to collect on our work at some point in the future. The problem is that we cannot know if the future is tomorrow or decades down the road. By taking the time to make an estate plan, we are insuring that we will have an individual we trust to step into our shoes if we become incapacitated, or to take care of our children if we are no longer around to do so. Having an estate plan buys peace of mind today so that we do not have to worry about tomorrow.