If you’re like the majority of Americans, you don’t have an estate plan. According to a Law Depot poll from 2023, 73% of respondents had no estate plan. Furthermore, 72% of respondents over 75 didn’t know what was an estate plan.
Unfortunately, estate planning is an easy process to put off. Nobody likes thinking about death or what happens before or after death.
However, as much as you despise the idea of death, you don’t want to subject your family to hours and days of dealing with the mess that a lack of forethought would cause.
Losing a close member is easier enough with the additional and quite avoidable complications that arise in the absence of estate preparation.
Cleaning up a neglected estate is both time-consuming and costly. That is why focusing on the benefits of estate planning for you and your loved ones may be what you need to design and finalize an estate plan or update an existing plan.
What estate planning entails
Estate planning entails creating and executing the documents required to handle your health care and financial affairs if you become incompetent or die. To attain this purpose, you need to prepare several documents. The names of the specific documents vary depending on where you live, but the purpose is the same.
The common documents you need include:
Guardianship. If you have minor children or other dependents, these documents state who will have custody of your children if you and your spouse die.
Trust. A fiduciary agreement that protects your estate from probate while also allowing you to personalize your estate plan.
A durable power of attorney. A legal instrument that permits your spouse, partner, or another third party to manage your finances if you cannot make decisions for yourself.
Financial power of attorney. A legal document that authorizes a third party to manage your financial affairs.
Advanced health care directive. A document outlining the medical care you wish to receive if you cannot make your own decisions.
Health care Power of attorney. A document that gives a third person the authority to make medical decisions on your behalf.
Authorization under HIPAA. A document that allows people to access your medical records and contact your doctors.
Before you create these documents, you need to do some work. You must inventory your assets and select who will inherit them when you die.
You also must select who will care for your minor children, if you have any, and who you can rely on to manage your financial and medical affairs if you become disabled.
To ensure the necessary forms are properly executed, you should employ an experienced estate planning attorney familiar with your state’s estate laws. That person will collaborate with you to interpret your wishes into the necessary documentation.
That is a lot of expensive labor, which explains why many people do not have estate plans. But don’t let that discourage you. This is because there are plenty of advantages to creating an estate plan. They include:
You secure your health and finances.
Nobody wants to think of becoming incapacitated. However, it does occur, particularly among the elderly. According to the Alzheimer’s Association’s 2023 Alzheimer’s Disease Facts & Figures report, over 6.7 million Americans aged 65 and over have Alzheimer’s disease, with 73% being 75 or older.
Columbia University researchers also discovered that 10% of persons over 65 had dementia, including Alzheimer’s, and another 22% had mild cognitive impairment.
Other diseases and illnesses affect older persons more frequently as they age. According to the National Institute of Health, 85% of Americans aged 65 and over have at least one chronic health condition, and 60% have two chronic health issues.
Cardiovascular disease, cancer, chronic respiratory disease, and diabetes are examples. While you may not experience cognitive impairment as you age, a confluence of chronic diseases can deplete your energy and capacity to reason and think coherently.
That is why preparing an estate plan where your family or other designated individuals can step in if necessary is critical. For example, you could have a stroke and require someone else to make medical decisions.
Without the essential paperwork, vital medical care may be delayed, resulting in bad results that could have been prevented if the proper information had been available.
In the long run, you may need assistance paying your expenses and making financial decisions. Unfortunately, when memory decreases, many older persons become victims of financial fraud.
Having someone you trust as a sounding board for your decision-making process might help prevent occurrences that can drain your money and cause financial problems.
You fulfill your wishes.
If you die without an estate plan or will, your assets will be dispersed according to the laws of your state. This is referred to as dying intestate. For example, suppose you want your spouse to inherit everything and your children to inherit whatever is left after your partner dies.
In some states, if you die without a will, your spouse inherits half of your possessions, and your descendants inherit the rest.
Another potential issue frequently arises: if you remember to amend a will you prepared years ago, your assets may be dispersed correctly.
Many times, people write a will when their children are young and then neglect to update it. Your life condition may have altered, but your will may not have.
Consider this: you may be divorced, yet your first spouse is still named in your will. If this is the case, you should contact an estate planning lawyer Upper Marlboro to get it updated.
There are numerous other instances in which an estate plan should be updated. Perhaps you sold a business, and a simple will no longer suffice; a trust may be required.
You should speak with an expert estate planning attorney who will help you choose the best vehicle to ensure your desires are fulfilled after your death.
You Avoid Probate
Probate is the legal process of recognizing a will and administering an estate. Probate can take place on a city or county level, depending on the jurisdiction.
All documents involved in probate, including a will, are public records and can be found on the internet with a simple search. Probate requires fees and, in some cases, lawyers. While going through probate without a lawyer is possible, it is a time-consuming and complicated process.
When you have a will as part of the estate planning documents, you avoid the costs and headache that comes with probate.