When I was growing up, we did not wear helmets when we rode our bicycles or seatbelts when riding in the car. Fast forward some years, many studies and lawsuits, and seatbelts are now required when riding in a car. Helmets are now recommended when riding a bicycle. Both the industry experts and parents realized that seatbelts and helmets serve as protection.
Estate planning is often viewed as another sort of protection. It is the process used to protect your assets in the event of a crisis. Proper estate planning also protects your family, and even your peace of mind.
Start by thinking about an unforeseen event that leaves you alive, but debilitated – either physically or cognitively. There will be many questions that need answers. Who do you want to make those decisions for you if you are unable to do so? Chances are you have a pretty good idea of who you’d prefer to act on your behalf, but that isn’t good enough. You must get it down on paper, in a proper format, in order for it to be effective. You may decide that your sister is the one who will be able to face medical situations and red tape. On the other hand, it may be a lifelong friend that you trust to step in and manage your finances, pay your bills, and file your taxes. Naming an Agent to make financial and/or health care decisions can be done by executing Power of Attorney documents. You can control what powers you are allowing your Agent to have, and even name a back-up in case your Agent isn’t available.
What if you are concerned about the possibility of needing long-term care in the future? Maybe you have a family history of strokes, or Alzheimer’s Disease, or spinal stenosis. If you want to protect your home, a beach house, or a lifetime of savings, it may be time to consider a Trust. There are various kinds of trusts. They hold different assets and they serve different purposes. They are not right for everyone, but maybe one of them is right for you. You owe it to yourself to find out the facts. That way, you can make an educated decision either way.
You may have built a very nice nest egg to leave your children. How wonderful! But keep in mind that there will likely be inheritance taxes owed at the time they pass to the kids. Will your estate have enough money to cover the taxes? Will it be a hardship for the individual beneficiaries? Life insurance can be an inexpensive way to shift the burden final expenses. It comes in many shapes and sizes. Talk to a trusted financial professional and look into the cost/benefit numbers. You may be pleasantly surprised. For some folks, combining coverage for long term care expenses and traditional life insurance can kill two birds with one stone!
And finally, there will come a day when you leave this world. If you would like to see your estate pass to specific people, under specific conditions, and with very particular people in charge, then executing a Last Will and Testament is what you need to do. Wills can now be molded with an amazing degree of customization. If you want to benefit someone who has special needs, or is not great with money, or who may be in a conflicted marriage, a good estate planning attorney will be able to give you some options for ensuring your loved ones are provided for – and yet still protected.
I’m sure I’m not the only person who grew up hearing, “If you fail to plan, then you plan to fail.” These are some suggestions of things you can do right now to plan ahead and help safeguard all the important things in your life.