What It Is and Why It’s Important
Estate planning is important for people of all ages, but as we age, the need for planning becomes even more critical. Many people avoid estate planning because they do not want to think about the end of life, failing health, or disability. Others believe that an estate plan is only for rich people. However, an estate plan is helpful for adults and their families regardless of overall wealth.
A person’s estate is all the property they own, both individually and jointly, including bank accounts, real estate, jewelry, etc., as well as what is owed to any creditors. Without an estate plan, it is very difficult to carry out a person’s wishes after they pass away, and their death can bring on a long, drawn-out probate process that is often expensive and time-consuming for the family. If an estate plan is in place, it can provide both protection for the wishes of the person and peace of mind for their family.
Below are some basic guidelines for what should be included in an estate plan.
- The Last Will and Testament provides for an executor of the estate – the person who will take care of managing the estate, paying debts, and distributing property as specified. The distribution of assets can be outlined in the will and may be as broad or as detailed as a person wishes. Beneficiaries and guardians for minor children, including any grandchildren in their grandparents’ care, should also be assigned in the will. Creating a will also affords the person an opportunity to outline how they want their funeral and burial to be carried out if they have specific preferences.
- A Living Will and/or an Advance Directive outlines a person’s wishes for end-of-life medical care. This document or set of documents can include, in as much detail as the person wishes, what medical treatments they would or would not like to have in specific situations. A living will takes the stress of making those decisions off of family members and helps to keep peace in families during times that can be difficult and emotional. It may be accompanied by other health care documents, such as HIPAA authorizations for the appropriate person or people to access your medical records in the event that they need to make decisions on your behalf.
- A Healthcare Power of Attorney authorizes one or more agents to legally make healthcare decisions on behalf of the person should they become unable to do so for themselves. It is important to get this document in place before a care crisis occurs or, if possible, immediately following any major health diagnosis. Even a person who has been diagnosed with dementia may still have legal capacity to sign a healthcare power of attorney, but if they wait for the disease to progress, they may no longer be able to legally sign this document. When healthcare decisions need to be made for someone else and there is no healthcare power of attorney, the alternative is an expensive and time-consuming process court process called conservatorship.
- A Financial Power of Attorney, also called a Durable Power of Attorney, names one or more attorneys-in-fact to act on behalf of the person for matters relating to finances. Like the healthcare power of attorney, the durable/financial power of attorney stays in effect during the person’s life and enables the attorney-in-fact to act if the person becomes unable to handle financial and legal affairs. Also like the healthcare power of attorney, this document should be in place before it is needed to avoid the stress and expenses of conservatorship. This document empowers the adult who signs it to have the final say in who will make decisions relating to their finances rather than allowing a court to decide. It can also help reduce family conflict over decision-making in the time of a crisis.
- Setting up a Trust can be beneficial for the distribution of specific assets or pieces of property. The benefit of a trust is that it does not go through probate, whereas a last will and testament does. Property held in a trust is still distributed at the death of the trustmaker, but it is done without the need of a court. This also allows for privacy of the trustmaker, whereas with a will that passes through probate, all of the deceased person’s assets and the terms of their will is made a matter of public record. There are many different types of trusts that function differently to accomplish a variety of goals, so it is important to discuss your situation with a qualified attorney who can identify the appropriate type of trust for you prior to establishing a trust.
Having an estate plan is necessary if you or your loved ones wish to have a say in what happens related to care and finances as health and ability decline and what happens to the estate after death. Consulting and planning with a qualified elder law attorney will help to ensure that all options are explored, and the best possible solution is utilized. The elder law attorney can walk you through all of the necessary parts of the estate plan, provide explanations, and prepare the paperwork that will ensure you or your loved one’s goals are met. Elder law attorneys help take the guesswork out of estate planning.