Last week Tim Fisher, a financial planner, wrote about financial plans. This article is about estate planning from a legal perspective.
Everyone can benefit from estate planning, regardless of financial wealth—and yet, not many of us want to think about “it” and even fewer of us make decisions and create “plans.” In this piece we introduce some of the basic goals of estate planning. In later posts we will discuss various aspects of planning. These articles are meant to raise questions and lead to conversations and action. We hope as you consider and review your planning you will reflect on your goals, your family and your community and take steps to make sure your plan will work for you.
“Why prepare an estate plan?” We ask this simple question at the beginning of each class we teach. The most common answers are:
• Peace of mind;
• Ensure efficient transfer of assets to family members;
• Preserve and protect assets;
• Take care of family;
• Support charity;
• Plan for nursing home costs/Medicaid;
• Take care of minor children;
• Take care of disabled children;
• Take care of divorcing children or children with addictions;
• Minimize taxes; and
• Avoid probate.
We rarely get this answer: To take care of me if I lose capacity.
When thinking about estate planning, nearly everyone focuses on what happens after they die. This is important. However, focusing exclusively on post mortem issues misses the most important person in your estate plan: You! How do you want to live? Where do you want to live? How do you want to be cared for if you are unable to make decisions?
Never has planning for mental incapacity been more important—and its importance continues to grow. We are living longer. One cost of longevity is an increased likelihood we may be unable to make decisions and care for ourselves. If we suffer from Alzheimer’s or some other form of dementia or otherwise lose our ability to control our lives, who will make decisions for us? This can be a difficult and unsettling question. It can lead to additional questions:
• Will our helpers be able to assist us during our incapacity or disability?
• Will our helpers know what we want?
• Will they be able to assist our beneficiaries during our incapacity?
In other words, will things be taken care of in the same way they would have had you remained capable of making decisions yourself? Can we plan for the inevitable wrinkles in life? Can we create a process that will address these potential challenges? This is a critical part of everyone’s planning.
Plans must be adapted as conditions, beliefs, and laws change. Keeping your plan up to date requires reviewing your plan regularly. Frequently it must be revised, and sometimes it must be completely revamped. And helpers must be taught (and re-taught) how things are supposed to work.
One of our goals is for all of our clients to be able to answer “yes” to these 4 questions:
• Do I understand my estate plan?
• Does it meet my goals and will it have a positive impact on my beneficiaries?
• Are my assets titled in a manner that is consistent with my plan? AND
• Do my helpers understand their responsibilities?
If you can answer yes to these questions your plan should work! Next time we will discuss planning for incapacity and steps to take to help make sure you receive the care you want.