You can trust an estate planning attorney to tell you that everyone needs an estate plan but the fact is it’s true. Every adult needs to organize their affairs and it’s not just a shame but a real danger that more folks aren’t aware of this. Why? Because an estate plan protects you and your family not just from taxes or end-of-life concerns but from disastrous health complications, irreparable conflict, and entirely avoidable tragedy.
The wealthy have long used estate planning to protect their interests and this fact has given rise to the misconception that it’s only the wealthy that need the financial tools estate planning provides. This is an all-too-common narrative. The most privileged often are the biggest beneficiaries of asset-preservation strategies when it is the common family that would reap the greatest reward from such assistance. This need not be the case with estate planning as the process is not nearly as complicated as folks tend to think and it doesn’t come at an insurmountable cost, either.
What’s an Estate Plan and Why is it so Important?
An estate plan consists of four basic parts: A Last Will and Testament, a Living Will, Powers of Attorney (both financial and medical), and a Trust. Understanding the purpose of each of these documents shows how an estate plan both ensures your long-term financial success and sets a safety net that protects your family no matter the circumstances.
1. Last Will and Testament
The most familiar estate planning document, a Will, serves to communicate how you wish your assets to be distributed upon your death. It also names guardians to minor children and provides space for bequests to individuals or institutions. A Will, like all estate planning documents, is a work in progress that you revise as your life grows and changes. Even young adults with modest financial assets have items of great sentimental value and so it is a good idea to execute a Will upon reaching the age of majority and keep it updated as new loved ones and dependents come into your life.
2. Living Will
Not to be confused with the above, a Living Will (also known as an Advance Healthcare Directive) communicates such end-of-life decisions as to whether you wish to be resuscitated and if you want life-prolonging treatment. Anyone at any time may fall victim to unforeseeable tragedy and when this happens families are often faced with agonizing decisions. Whether to place you on a breathing or feeding tube, to risk emergency organ donation, or to administer dialysis are all controversial decisions that may drive irreparable conflict between loved ones. A Living Will avoids this providing clear instructions for your family to follow.
3. Financial and Medical Power of Attorney
These documents allow you to appoint a trusted loved one or advisor to make medical and financial decisions on your behalf should you suffer incapacitation. Doing so is another important way to prevent conflict around contentious issues and a tool that protects you against medical and financial missteps. Your medical power of attorney will ensure that the care you receive aligns with your values and is appropriate to your needs. Meanwhile, your financial power of attorney (who does not need to be the same person) will ensure you do not fall behind on important transactions.
4. Trust
Trusts are among estate planning’s most misunderstood subjects. No single article can explain the many ways a trust helps to protect your finances which is why it is important to discuss the matter with an experienced estate planning attorney.
Most commonly, a trust is used to save your loved ones the hassle and expense of probate and to minimize taxes such that you maximize the assets you leave behind. Trusts are also often used to ensure loved ones with special needs retain financial independence without losing access to public benefits. Folks with a loved one who struggles with addiction may use a trust to control the form in which an inheritance is received while others may rely on a trust to ensure the continued care of pets.
Setting up an estate plan is easy and requires no more than a thoughtful conversation with an attorney who specialized in the field. Doing so protects your family in a multitude of ways and ensures your finances are well-managed throughout your adult life. While there is no denying that setting up an estate plan implies an initial investment, doing so inevitably saves you and your family money in the long run.
To learn more or to dive into building your estate plan today, do not hesitate to reach out to the Deliberato Law Center either by calling our office at (216) 341-3413 or using the contact form on our website.
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