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The average American’s estate plan consists of . . . nothing. Fully seventy percent of adults have prepared nothing with respect to their estate. Although there are a myriad of issues that can arise in crafting an effective plan — taxes, disgruntled disinherited beneficiaries, special-needs beneficiaries, multi-state real estate issues, etc. — EVERY individual has three concerns for which appropriate action must be taken.
First, and most commonly thought of in the realm of estate planning, is determining where your assets may be distributed upon your demise. Virtually every individual needs a will, even as a backup document, but for some, simpler or more complex means may be the tools employed to deal with this issue.
Sometimes, effective beneficiary designations may be useful. Transfer on death or payable on death titling, or even forms of joint tenancy may work in certain situations. Other individuals may utilize one or more trusts to deal with their assets.
Our second and third issues deal with a concern that is actually more common than death: incapacity. In this case, we are speaking of a temporary or permanent situation where you are unable to make decisions due to illness or accident.
If that occurs, our second issue is for you to have an appropriate person designated (with one or more successors if your first choice is unable or unwilling to act) to make medical and personal decisions for you if you couldn’t. Documents such as living wills, health care powers of attorney, or health care surrogate designations may do the trick.
Our third and final issue is for you to have one or more persons or institutions nominated to handle your financial affairs if you are unable to act. You need to have a plan for someone to pay your bills, manage your assets, file your tax returns and enter into or even fulfill contractual arrangements on your behalf. Here, we find trusts may be useful as a tool, in addition to their role in your death-planning. Sometimes, simpler documents such as durable powers of attorney for property may work just fine.
The bottom line is you need not know what documents are appropriate for you. What you do need to know is what questions to ask before you visit with your estate planning attorney. Your situation may be more complex, with other concerns that need to be addressed. But regardless, everyone needs to deal with disposition of assets upon death and medical and financial decision-making upon incapacity. Failure to do so not only affects your family, but can affect you, if you are alive but unable. Moreover, neglecting this important part of your life may leave your affairs in the hands of whomever a court may appoint. Why not provide your own choices in advance!