- Education and Science
For most people estate planning is something unpleasant, worse than root canal. It makes you think about death.
Reality is that it is also about life, the rest of yours and the lives of those you care about or who care about you.
It's not just for the super rich or even the just well-to-do. Everyone has an estate. Even if you have nothing else, everyone has life. Everyone has an estate plan, the one lawmakers have made for you. Most people have no idea what's in it. Do you know who makes decisions about your life when you cannot? Do you know what happens to your stuff when you're gone?
Estate planning is about control, making sure your wishes are followed. It is also about making it easier for the ones who will carry them out for you.
Estate Planning is an Ongoing Process
As nice as that might be, estate planning is not a set-it-and-forget-it chore.
Things change all the time. It is impossible to predict what every change is going to be like. Some people leave your life. Others enter it. Your plan needs to be adjusted as the world around you changes.
Where to Start
You may not think you have much to plan about right now. One of the reasons for writing this article is to show you that you probably have more to worry about than you think.
I can understand if it seems intimidating. It certainly is, but it is not impossible. Every task, no matter how big or complicated, can be broken down into manageable chunks. Start with the ones that matter right away while you're still around.
Before You Die
Today you feel pretty good. You could go rock climbing if you wanted to. That might not be likely to change any time soon, but it could. In an instant your ability to do anything at all could disappear. Initially, doctors and nurses will be making decisions about what happens to you.
Once they have stabilized you, made sure you'll live and not die, decisions have to be made about your further care. If you cannot, a set of default rules will be followed. Is that what you want?
You could become incapacitated, unable to make decisions about your life at any moment, at any age. The way to deal with it is to tell somebody in advance what you would like to have happen and then give that person the power to make it happen.
Remember, doctors and nurses are conditioned to preserve and prolong life at all cost. Sometimes that cost is unnecessary, painful or burdensome. You have the right to say when enough is enough even when you can't.
Quite possibly the most difficult part of this is to decide what should happen in each circumstance, to understand the consequences of treatments you've never even heard of before. It is a daunting task, indeed, but, again, it can be broken down into small pieces. Begin with a broad view of your life philosophy. Do you favor quality of life over quantity of life? Once you have settled that question, a whole host of details automatically fall into place and that may be all the detail you ever need.
The important part is that whatever you decide impacts others. Therefore, it is critical to have the conversation with them in advance. The more time you spend on the details now, the lighter the burden for them later.
Typically, you will prepare two separate documents. A living will outlines your wishes in as much detail as you see fit. A power of attorney allows someone to make decisions on points where the living will is silent or open to interpretation. That someone needs to be equipped with insight into your view of life to be able to make those decisions as if he/she were you.
A living will form is a start. Think of it as prompts for the most likely scenarios, but be sure to make it your own. This package also includes power of attorney forms.
Even when you're laid up, your financial life is likely to continue with or without you. Bills still have to be paid, Tax returns still have to be filed. Portfolios and property still have to be managed. Without proper attention, serious losses and other problems could develop quickly.
The answer is a power of attorney. Now, there are different kinds of power of attorney and it is important to get it right. You could simply download a standard form from the Internet, but you would most likely be missing a great deal of legal detail. Hire a lawyer to do this for you so it does exactly what you want it to do.
The details are beyond the scope of this article, but some of the questions you need to consider are:
Should it be general or just for a specific purpose? Should it be the same person who makes medical decisions? Should it be in effect while you can still make your own decisions? Will it be acceptable to the bank, the IRS, the landlord, etc.?
Long Term Care
Long term care is not usually part of estate planning. It is, however, part of life under very difficult circumstances. Planning for it is appropriate if not required for your planning to be complete.
After You Die
Very few people live completely isolated from everything and everybody. When you die, it is likely to impact somebody somewhere. What will their experience be like? Is that what you want? Do you even care?
If you have young children, one of the first things, if not the very first thing, that needs to happen is to tell them about your death. Sometimes, there will be no time to prepare for this and the task may simply fall into someone's lap whether the person is ready or not.
At other times, it is possible to plan for it. If you have the option, think about how you want this part handled.
Traditionally, the role of life insurance in estate planning involves passing assets on to the next generation. Under a broader view, life and death are intricately intertwined.
For example, small children or spouses may depend on you. Life insurance is an important way of caring for them. It should be included for that reason as well.
Another thing that needs to happen right after you die is disposing of your body. Of course, this is going to happen somehow whether you get involved in it or not. It might be an emotional time for the ones you leave behind and taking care of this in advance will make it easier for them.
Typically, at least some arrangements have to be made right away, perhaps within hours. Select someone who is not likely to get emotionally involved and who is close enough to you to learn about your death almost immediately. Have a conversation with that person. Let him or her know if you have any special wishes and let everyone else know who the person you have selected is.
Special wishes might be concerning burial location and method, cremation, donation of body parts, etc. Have a conversation with a funeral director in the area where you live. Find out what they need to make it happen the way you want it. Make the introduction to the person you have appointed to be in charge of it.
You can make this part of your will, but it is better to simply give him/her the instructions separately. Wills aren't always accessible right away. It may not be opened for days or weeks, long after the funeral is over. Don't rely on oral instructions, though. Write it down so there will be no confusion.
The first thing that comes to mind when you talk about your will is how it distributes your money. It does do that, but it's not always as simple as that.
I always thought a will was a way to avoid probate, a lengthy and expensive court procedure. That's not the case. On the contrary, distributing your assets with a will is guaranteed to send it to probate.