“Estate planning is not just for affluent individuals. While good estate planning can lead to desirable financial outcomes under the right circumstances, estate planning in its most basic form involves implementing the legal steps and directives that are necessary to ensure that your health and your assets are managed properly in the event of incapacity and death.”
Everyone needs to have an estate plan to ensure that their family can take part in medical care, assets will pass to the heirs they want and to protect minor children, as explained in a recent article titled “Estate Planning Considerations That Apply to Nearly Everyone” from mondaq.com. An estate plan does all this, and more. Having an estate plan can also protects privacy; any assets moved into a trust do not become part of the public record.
Here are the documents making up the foundation of an estate plan.
Last Will and Testament. This is used to direct the disposition of assets and appoints an executor to handle final affairs after your death. If there is no will, the state law controls how your estate is distributed.
Revocable Trust. Trusts permit more control of the management and disposition of assets in a more private and tax-efficient way during your lifetime and after death.
General Durable Power of Attorney. This document usually names a spouse, adult child or trusted individual who can take over your legal and financial affairs, especially if you should become incapacitated.
Health Care Power of Attorney. Everyone over age 18 should have this document. This nominates a person you choose to make health care decisions. Without it, parents of teenagers and young adults may not be involved in their care. Treating physicians will not be able to discuss your loved one’s care, or you may need to petition the court for guardianship.
Living Will. This document allows you to express your wishes with regard to end-of-life care and medical treatment decisions. It alleviates the emotional burden of guessing what you would have wanted by family members.
HIPAA Authorization. Your medical and health insurance records are protected from being released to third parties without the patient’s consent. While this is helpful for patients seeking to maintain their privacy, it also means parents or loved ones will not have any access to medical records and healthcare providers will not discuss the patient’s medical condition with family members. Fines and penalties for professionals and facilities are strict.
Asset and Beneficiary Designations. Part of an estate plan includes ensuring that assets are in alignment with your wishes. Your will does not control how assets with a beneficiary designation or those with joint ownership titles will be inherited. For your estate to achieve the outcome you want, you’ll need to dig deep into your records and ensure that all assets are properly titled, including insurance policies, investment accounts, retirement accounts, property and any other assets.
If you have an estate plan in place and have not updated it in recent years, or failed to get one or more of the above-mentioned documents, there is no time like the present to do so. Unexpected events are always around the corner and being prepared in advance helps ensure your wishes will be achieved and your family will be protected.
Reference: mondaq.com (July 29, 2022) “Estate Planning Considerations That Apply to Nearly Everyone”