WHO NEEDS ESTATE PLANNING?
Who needs estate planning? People ask me this question a lot. The simple answer is: everyone. Everyone? Why yes, everyone needs estate planning.
But I’m single! I don’t have a lot of money. I don’t have children. The excuses are limitless. But, the simple answer is, everyone needs estate planning. Let me tell you why.
Estate Plan Basics
Most people think estate planning means you write a will. Yes, Wills are a part of an estate plan. But, a will is just one part of a good estate plan.
An estate plan consists of four documents: Last Will and Testament; Durable Power of Attorney, Living Will and Health Care Power of Attorney.
Your will determines what happens after you die. The Durable Power of Attorney, Living Will and Health Care Power of Attorney documents determine what happens to you while you are alive.
What if you became disabled? Or, developed dementia? Who will make important medical and financial decisions for you?
When you execute a power of attorney documents, you appoint a trusted person to make such decisions for you. You also outline what that person can and cannot do for you. You can even spell out what types of prolonging life measure you would like taken.
So, in a nutshell, estate planning means you create documents to be used after you die and during your lifetime. You get to determine what you want done in any given situation.
Now that I have given you a little information about what an estate plan is, let’s turn to why everyone should have an estate plan.
Are you over eighteen?
Are you over eighteen? If so, you need an estate plan whether or not you are single.
Unfortunately, incapacity can strike you at any time and any age. When you turn eighteen, your parents can no longer make medical decisions for you. So, you need to appoint someone to make those medical decisions for you. How? By having an estate plan. More specifically, you need a Health Care Power of Attorney and Living Will in place. That way, a trusted person of your choosing makes important medical decisions for you when you are unable to do so.
At the very least, when you turn eighteen, you should execute a Health Care Power of Attorney. You never know what might happen. Better to be safe than sorry. Unless you do not care who makes decisions for you…..
Are you single?
Are you single? Do you have a bank account? Do you have investments? How about a house?
If you own assets, you need an estate plan. You see, with a will in place, you get to control who gets your stuff when you die. If you do not have a will in place, the state decides who gets your stuff. The state does not care whether or not your like a particular person.
You also need to appoint someone to make medical and financial decisions on your behalf if you become incapacitated. Otherwise, someone will have to open a guardianship. A guardianship requires a court proceeding. A judge will decide who makes decisions for you. You will not have any input in the judge’s decision. So, do not let this happen to you. Get your estate plan done.
Unmarried Couples Living Together
A lot of couples are choosing to live together before marriage – if they even marry at all. However, without the legal protections of marriage, your partner will not be able to make decisions for you should you become incapacitated. Unless you have an estate plan.
You need to appoint your partner your attorney in fact or agent through a power of attorney. If you do not, he or she has no legal rights to make decisions on your behalf.
Also, he or she will not inherit from you without a will. Remember that intestacy statute I mentioned earlier? That statute bases inheritance on blood family or spousal relationships. Unmarried partners are not included the intestacy statute. Like it or not, the law does not care if you are living together and are committed to one another. Unless you have a will in place leaving your partner your assets, he or she will not receive those assets.
Married Couples Need Wills
If you are married, you should definitely have an estate plan. One advantage to married estate planning is the marital deductions tax savings. What is that, you ask?
The marital deductions tax savings allows you to pass on any of your unused federal estate tax deduction to your spouse when you die. That means your spouse gets an even larger amount in federal estate tax deductions when he or she passes. A huge savings benefit to your heirs.
However, this is not an automatic deduction. You must provide for the deduction option in your will. Otherwise, your spouse does not receive this benefit.
Estate plans reduce stress. How? Your estate plan clearly states your wishes. There is no guess work as to what you might have wanted done. You have already laid out the framework.
A good estate plan provided financial security for your spouse and children when you pass. Tax savings advantages should be a part of your estate plan. Through good estate planning, your spouse and/or children can have immediate access to your finances when you die.
Do You Have Minor Children?
If you have minor children, you need an estate plan. You need to decide who will be raise your children if you and your spouse/significant other are deceased. When you execute a will, you name the person or person who you want to be guardian of your children. Without such a provision, a court will decide who should raise your children.
A good estate plan also provides financial security for your children if you die. You get to determine at what age your minor child should receive his or her inheritance. You determine what each child should receive when you die.
Are You Elderly?
As we age, estate planning becomes even more important. You may need to start planning for the care of a disabled spouse if you pass away first. You also want to start thinking about who is going to make those medical or financial decisions for you if you become incapacitated. Also, what are your feelings about prolonging life saving measures? Maybe you want to start thinking about asset protection.
Your estate plan allows you to make these decisions. Even if you have an estate plan in place, you should review your plan. Does your plan still apply? Do you need to make changes? Have your life circumstances changed? If so, you should consider redoing your estate plan.
Hopefully we have shown you why everyone eighteen or older should have an estate plan. For more information, contact us to schedule a free complimentary estate planning consultation.