Why Everyone Should Have an Estate Plan
Many young people are hesitant to consult an attorney about creating an estate plan. Young Americans may believe that death is far away or that they don’t have enough assets to make estate planning necessary. However, estate planning is essential for older and young adults regardless of age or assets.
Estate planning laws are different in every state. It is crucial to talk to an estate planning attorney in your area to get legal advice to fit your individual needs.
A properly drafted estate plan can help provide for you and your dependents if you become temporarily or permanently disabled due to injury or illness. A medical emergency can happen at any age and leave you too injured to make health care decisions. For example, your estate plan should include the following:
- Health Care Proxy: A health care proxy allows you to appoint a person you trust to make medical decisions for you should you become incapacitated. With a living will, your health care proxy is legally obligated to make the health care decisions that the person believes you would make for yourself in the given situation. You may want to choose a family member or close friend who knows and understands your wishes.
- Power of Attorney: Like a health care proxy, the person you appoint as your power of attorney is responsible for making decisions on your behalf should you become incapacitated. Your power of attorney will make your business and financial decisions for the period you cannot do so because of incapacity. The durable power of attorney may be the same person as your health care proxy or a different person.
- Disability Insurance Coverage: Life insurance is not the only type of insurance that you should consider to provide for your family. It is essential to consider what will happen to you and your family if an illness or injury prevents you from working. How will your income be replaced? Who will care for the children and clean the house? All of these things should be considered, and an appropriate level of disability insurance coverage should be obtained so that you will have the money you need should you become unable to work.
Unfortunately, tragedy sometimes strikes, and people die at a young age. It is integral to plan for the worst, including the unlikely occurrence that you could pass away before your time. Careful planning and using the proper legal documents will allow you to:
- Appoint a Guardian: You can choose anyone you want to raise your minor children in the event of your death. However, your guardianship choice must be clearly stated and legally executed. Otherwise, the state will decide who gets your kids, and it may be a relative of whom you disapprove.
- Care For Your Adult Children: Even if your children are adults, you may still want to provide for them in the event of your untimely death. If your child has special needs, an estate plan can ensure they continue getting the care they need. Without an estate plan, your children may inherit all your property without restrictions.
- Distribute Your Assets: If you don’t decide who will get your assets, including your savings, your home, your jewelry, and your personal property, then the state will decide for you. Your property after death is distributed according to state intestacy laws. For example, in Virginia, the real estate of someone who dies passes by intestate succession based on the relationship to the deceased. If there are no other heirs of the decedent’s estate, the property passes to the state.
- Help Your Family: Dying without an estate plan can put a lot of pressure on your family. After you die, your property goes through the probate process, which can take time and additional costs. Probate court proceedings are also part of the public record. Estate planning can help you keep your family matters private and save time, estate taxes, and unnecessary costs. Proper estate planning can also avoid family disputes over property and reduce the risk of legal battles.
The most common basic estate planning documents are generally the will and the trust. If you are unsure whether you need a revocable living trust, an attorney can help you decide what estate planning tools are best for your situation under the state law where you are living.
- Will: A will, also known as a last will and testament, is the simplest type of estate plan and can allow you to provide for how your property will be treated after death. You can also name your beneficiaries directly through your bank accounts, retirement accounts, and insurance policies.
- Trust: A trust is a legal instrument that allows the grantor to designate property for a specific purpose. For estate planning, a living trust is the most common type, where the property is placed in the trust for use during the grantor’s life and passes automatically on death under the trust’s conditions. These trusts are also flexible and allow you to change the trust over your lifetime. Other types of trusts include irrevocable trusts, charitable trusts, and special needs trusts.
Setting up a trust may be more complicated than a will, but a trust has certain benefits that make it a better estate planning tool than a simple will. For example, if you live in Oregon but own property in Washington, your property may have to go through probate in separate court proceedings in each state. A trust may allow you to avoid additional probate court hearings.
If you fail to develop and execute an estate plan that covers all of your needs, then the state will decide who gets to make your health care decisions, who will take care of your loved ones and how your assets will be distributed. You likely have more at stake than you think, so don’t take any unnecessary chances.