As we endure the effects of the COVID-19 pandemic on our society, we are presented with a great time to take stock in our blessings and simultaneously plan for a better future. And what better way to do that, then work on your estate planning. If you do not have an estate plan, state law will determine who receives your property, which may not necessarily be the individuals to whom you wish to receive it. Even if you do have an estate plan, now is a perfect time to revisit and revise your plans. But in the meantime, it may be wise to consider the future beyond your lifetime.
How can you plan for the future? Consider drafting an estate plan. Here are some consideration on doing so:
1. What is Estate Planning?
Before diving into the reasons why estate planning is so important amidst a pandemic, you must have a thorough understanding of it.
Everyone has an estate whether you realize it or not. An estate can consist of a house, a car, or even your record collection. It could also include your investments, checking and savings account, life insurance, furniture, and all your personal possessions. Unfortunately you can’t take your record collection with you when you pass away, so you’ll need to plan how it will be used beyond your lifetime.
That is where estate planning comes in. When we talk about basic estate planning documents, these documents include the client’s last will and testament and a revocable trust agreement, and these are the documents that memorialize how your property will pass in the event of your death. These documents essentially take you out of the state-mandated “probate” process. In addition to these documents, a basic estate plan will also include a durable power of attorney, a living will, a designation of healthcare surrogate, and a designation of a pre-need guardian. While a detailed explanation of each of these documents is beyond the scope of this article, we will be reviewing each document in future releases on The Verdict, so definitely stay tuned for more there.
That’s an earful, to be sure. So let’s go back to your record collection to make sense of it all. While living, you need to decide who’ll receive the records and when they will receive it, and even how they can be played (only on YOUR favorite record player). And you need to do that for all your possessions. That is essentially estate planning in a nutshell.
2. When Should You Start to Prepare an Estate Plan?
The answer to the question above is very simple: as soon as possible! What are you waiting for? Plan ahead. You are never too young or too old to create an estate plan. Do it. Not for you, but for your family.
3. Understanding the Components that are Placed in an Estate Plan
There are two common misconceptions surrounding estate planning: (1) that it just involves gifting your property and (2) that it is only something the super-rich need to do. However, an estate plan goes far beyond just who receives your property. In fact, it includes a plethora of factors that you may have never thought would be included.
a. Your children
As stated above, you are never too young to create an estate plan. Life has countless bumps along the way and thus you can never be prepared enough to embrace them. Therefore, your estate plan should include a provision on the guardianship of your minor children. This provision will set forth how you envision your minor children will be taken care of in the unlikely event of your death.
b. Financial planning
Someone will have to oversee your finances. You will want someone who you could put your full trust into, to ensure that your money is handled correctly.
c. Decision-making in the Case of Incapacity
Yes, your will could even include how you want your life to be handled in case you become severely ill. Do you want life saving treatments? Answer that question in your plan so that your family knows your wishes.
d. A Dispute Arises
Watch the movie, Knives Out, and you will immediately run to your will to include this provision on what to do if your heirs fight over your possessions. Including this provision will hopefully save your family from a huge fight that could potentially render familial relationships damaged, forever. This provision will establish that in the event of a dispute or disagreement among family members, you wish for them to send the dispute to arbitration, among other alternatives. Include it. Providing peace of mind for your family after your passing is of deep concern to most.
4. Grasping State Law and its effects on Estate Planning
State law will have a profound effect on your estate planning. How so? It has the power to usurp your decision as to who will receive your possessions beyond your life. One example is that the state will decide who your possessions will go to, if you do not have a plan set forth. Stated more directly, if you have no children but do have an unmarried domestic partner, your estate would pass to your parents upon your death, not your partner. That could potentially create many issues for you that could be avoided, simply by creating an estate plan.
5. Take Advantage of What you Can Control
Our final lesson and takeaway from this article is to always take advantage of all opportunities you are presented with. Most importantly, take advantage of the easiest ones to control. For example, ensure that your beneficiary forms with your bank are filed and up to date. You should immediately amend them as well when you want to change your beneficiary. Remember, this also applies to insurance policies and even retirement accounts. There is no reason why you cannot have this done. It is easy, simple, and will save your beneficiaries a whole lot of trouble when you pass away.
* * * * *
While we’d love to invite you to stop by one of our Peace of Mind centers, our physical openings have been delayed due to the pandemic. But you can still schedule a time to speak with one of our licensed will and estate attorneys by phone, video or chat for just $9. To do so, simply click here.