When some people think of estate planning they picture a complex web of trusts and shell companies designed to protect some billionaire’s empire. The truth is that estate planning, even in its most basic form, is a vital tool for everyone—regardless of your net worth. Do you have health, life or home insurance? Sure. How about emergency contacts on file with your employer? Probably. What about an estate plan? If the answer is no, you should consider just how prepared you are for the unexpected and how that could impact your loved ones.
What I call the “basic" estate plan consists of several key documents that are relatively inexpensive to obtain but that can reap huge benefits for you and your family regardless of your financial wherewithal. These documents include a will, durable power of attorney, health care proxy, and advance directive, each of which I talk about in detail in separate posts. The bottom line is that each of these documents gives you the power to make important live decisions for yourself and your family, rather than having them made for you.
Take for example the common will. If you think you don’t have a plan in place regarding how your property will be distributed when you die, you are wrong. There is a plan in place, but you don’t get a say in it. Unless you have a valid will, the Massachusetts laws of intestacy with govern who gets what and how much from your estate when you pass, regardless of your personal wishes. A will is especially important for families because it can be used to designate who will look after minor children if their parents pass and how assets left in trust for them will be managed.
Similarly, the durable power of attorney and health care proxy allow you to make powerful decisions that would otherwise be made for you without your say. These are not ‘end of life’ plans but rather plans for how you want yourself and your affairs taken care of if you become unable to see to it yourself. The durable power of attorney (which designates someone to handle your financial affairs) and the health care proxy (which designates someone to make health related decisions) are ways to empower and instruct those you most trust in the event you become incapacitated due to accident or illness. Without these forms your loved ones will have to bear the burden and expense of having a court appoint a guardian or conservator before making these often time-sensitive decisions.
Finally, the advance directive (also known as a living will) allows you to decide how you want end of life decisions handled. Although not a legally binding document, the advance directive is often executed along with a health care proxy in order to instruct your care provider in how you would want them to handle the difficult decisions that come to pass when a loved one is terminally ill. This is a chance for you to make you most personal wishes known regarding end of live treatment. Just think, would you want to have to decide when enough is enough for your terminally ill parent without knowing their true wishes? Would you want your child to be in that position?
Contact an estate planning attorney to discuss how you can take control using these important life documents.