Have you been dragging your feet on estate planning? You are not alone. Nearly 64% of U.S. adults do not even have a will, including 51% of people age 55 to 64, according to the website Rocket Lawyer.
But a lack of an estate plan, or an outdated one, leaves you and your family vulnerable. Your assets could get tied up in the costly court probate process after death. Your loved ones might have to make difficult decisions about your medical treatment if you become incapacitated. And they might dissolve into bickering over what you might have wanted.
Think about it: You know your intentions, and who better to choose who will make decisions for you if you become incapacitated? That’s why it’s important to nail down these basic elements:
- A will that includes a list of personal property and who will inherit it.
- A durable power of attorney to make financial decisions in the event of your incapacity.
- An advance healthcare directive.
Here are a few reasons to get your affairs in order:
Make sure your loved ones will be taken care of.
A will is especially crucial for blended families, where children from a previous marriage may not be automatically provided for in the manner you intended. Taking stock of your assets also offers a chance to think about how well your family will be able to adapt and then plug any gaps. For example, long-term care insurance can protect against the high cost of a nursing home stay, and life insurance can provide a safety net to help pay the bills.
There are a few strategies that apply here. One option is to list beneficiaries for your bank and retirement accounts to ensure the money goes straight to them. You can also create a revocable living trust for your property. Give assets away while you’re alive or consider joint ownership.
Ensuring someone you trust will be available to manage legal and family matters.
A durable power of attorney can also step in if you should become incapacitated and handle property maintenance or manage investments or a small business. You can designate joint power of attorney if you think more than one person is needed to handle your affairs.
Securing the medical treatment you want.
A living will and durable power of attorney for healthcare, both elements of an advance healthcare directive, can address when to provide or withhold artificial nutrition and other life support.
Minimizing federal and state estate taxes.
There are a number of ways to preserve more of your assets to benefit your love ones and favorite charities.
Your family and your legacy are important; take the time to protect them as best you can. Once your plan is in place, you will need to review it, including beneficiary designations, once a year and after each major life change.