As we’ve discussed before, an estate plan is not just for “old” or “rich” people. It is for every adult, regardless of age, wealth or marital status. Estate plans are simply a mechanism to make your wishes known when you are unable to do so. Anyone can have one and everyone should have one; but what can an estate plan do for you? With some educated, thoughtful decisions and a good attorney, your estate plan will allow you to PROVIDE, PROTECT and SAVE.
You have worked hard your whole life to provide for your family, why wouldn’t you want to take care of them at your death as well? Wills and trusts allow you to provide for your family, charities or anyone else you want to leave money, property or possessions to at the time of your death. Similarly, a financial power of attorney allows your agent to step into your shoes and provide financially for your immediate family if you are unable to do so during your life.
Take a moment right now and ask yourself the question, do I know what kind of medical treatments my parents would want if they got sick? Are they different if they have a stroke? Cancer? Surgery at the age of 90? What quality of life is important for them to maintain? Chances are, when you think deeply about it, you don’t really know what they would want, at least, not in every situation. Medical powers of attorney and advance directives or living wills provide guidance to your medical decision-maker during your life and provide peace of mind to family members who are concerned about how you are cared for during illnesses. Additionally, a disposition of last remains, allows you to decide what will happen to your body upon death and how you would like to be honored.
In reality, all of your estate planning documents provide guidance to your loved ones about what is important to you both while you are alive and after you die. It can help ease the strain on your family during difficult times.
Think back to when you were 18 years old, would you have trusted yourself with a large sum of money? Do you have a loved one that receives government assistance due to a disability? How about a family member that just can’t seem to hold on to any money they get? They always seem to owe money to someone. What about a loved one who has an addiction? Leaving any of these people a large sum of money outright could hurt them more than help them. Setting up a trust either while you are alive or through your Will can help protect your young children, loved ones with special needs, or those who have problems with drugs, alcohol, gambling or other addictions.
If you have a business, have you thought about what will happen to it when you can no longer run it efficiently or wish to retire? Do you want your children to take over for you? Are all of your children interested in running the business or are some of them only interested in receiving their portion of the profits? An American Family Business survey from 2007 found that only 30% of family-owned businesses survive into the second generation. Business succession planning allows you to protect your hard work by deciding which of your children, if any, takes over for you, when and how it will be done.
What happens if you die without a Will? The laws of Colorado decide who and how much each person receives. Dying without a Will usually means that the probate process will take longer and therefore be more expensive. It could also take longer for your beneficiaries to receive what you left them.
Additionally, there might be questions about who should serve as personal representative to your estate, what should be done with your remains or any number of other issues. Uncertainties will most likely lead to fights and stall the process even more, causing the cost of administration to rise. A properly executed estate plan can prevent many of these fights before they begin.
While estate taxes will not be an issue for many people, if you have a large enough estate, tax planning is necessary to minimize estate taxes. It is important to speak with an estate planning attorney who does tax planning to discuss your full range of options.
Above are just some of the reason why preemptive estate planning is beneficial.
Remember that an estate plan created when you have time to dedicate to it will be easier and more comprehensive than one thrown together during a crisis. Much like with your health, being proactive will be more beneficial than being reactive.
You know you need an estate plan. It’s on your endless to-do list but always seems to get pushed to the bottom, while you handle other things. You’ve heard it’s a thing you should have, but what exactly is an estate plan? Isn’t it only something old people need?
Estate plans should not be shrouded in mystery and are something that every adult needs, regardless of their age, material situation or wealth. They should plan for incapacity and clearly define your wishes at death.
Planning ahead of time can make a world of difference to you and your loved ones when tragedy strikes. The most essential documents for any estate plan are: