An executed estate plan is vital for most adults. Estate plans are a collection of legal documents that provide instructions for what should be done if an individual dies or becomes incapacitated. Without an estate plan, one loses all control over the situation. Instead the court will make the decisions and they may not be the same as what the individual would have chosen.
Easy To Delay Estate Planning
For younger people death seems far off and other matters feel more urgent. Plus, lawyers cost money and creating legal documents may not seem like a priority right now. It can be tempting to procrastinate.
Single individuals without children often view an estate plan as unnecessary because they do not have dependents. Read my prior blog post to delve into why Estate Plans are a Vital Element of Financial Management for Singles.
I get it. Personally, I did not have an estate plan until I got married and we had shared assets – and that is as someone who works with this stuff daily. And if you have to decide between paying your bills and paying for an estate plan, then clearly there is no contest. But, for those with some disposable income, an estate plan should be a high priority.
Not Just For Rich People
The phrase estate plan itself can be off-putting. Not many of us think of ourselves as having an “estate.” Estate planning sounds like something for old, rich people to worry about. But, the terminology is misleading.
An estate plan covers more than who inherits your money. It addresses guardianship of children, end of life wishes, and the management of your health and finances if you are unable to manage them yourself. See this helpful essay on the key aspects of an estate plan.
Uncomfortable To Contemplate
Nobody wants to think about their own death. Creating an estate plan requires making some very difficult decisions: Who will care for your minor children? How will your assets be divided? It is natural not to want to consider these circumstances.
Ultimately, however, no reason for procrastination negates the fact that incapacitation and death can happen suddenly and unexpectedly. You are doing a disservice to your loved ones if you don’t make arrangements for the possibility. The process will be more difficult and drawn out without a plan in place. Your loved ones will be dealing with your affairs and making decisions during a time of grief or turmoil.
Estate Plan As A Work In Progress
One mindset shift that may help is realizing an estate plan is not one and done. I have seen many people delay crafting a plan because they cannot decide on the best executor or the exact percentages of inheritance. Recognizing that these decisions can – and likely will- change over time may help folks resist delay due perfectionist tendencies.
Do you find yourself procrastinating? Asking yourself, “am I positive this is what I want?” can result in endless delays. Instead, try asking “is this a better option than tragedy striking with no estate plan in effect?” You will likely find it worth moving forward with a good enough plan.
You should be making updates to the plan whenever you have a major life event (birth, death, move between states, etc.). Even if there are no personal changes you will need to review your plan occasionally because laws change. It is important to make sure that your plan is still working in the way it is intended.
Estate Laws Are Country And State Specific
This blog post is directed towards those who are citizens of and living in the United States. Clearly, each country has its own laws and regulations. If you are not in the US, I encourage you to explore the laws of your country of citizenship and/or residence. Additionally, estate laws are specific to individual states.
Necessary Documents
Generally speaking, the documents each person should have are as follows:
- Will and/or Trust – These documents assign a “personal representative” (also known as executor) and outline how your assets will be divided.
- Durable Power of Attorney – A document that designates who will manage your finance if (and only if) you become incapacitated.
- Living Will – Specifies which life sustaining measures you would or would not want used.
- Health Care Power of Attorney (Also called a Health Care Proxy) – A document that designates who will make decisions regarding your health care if (and only if) you become incapacitated.
Additional details on these estate documents can be found in this article by Trust & Will.
Please note, I am not an attorney and this message is intended for informational purposes only. I wish to provide encouragement to and reasons for creating an estate plan. Always speak with an individual who is licensed to practice law in your state for the drafting of any legal documents
Creating an estate plan can be both emotionally and financially taxing. I don’t wish to downplay the challenge. At the same time, preparing for the future and potential eventualities is a vital element of financial planning. Whether you create a budget, prepare a cash flow projection, or draft estate documents, having a plan in place can be very reassuring and reduce ongoing stress.
The good news is that you do not need to plan for every eventuality. If you choose a guardian for your minor children and later have a change of heart you can choose someone else. If you decide that your power of attorney is not good in a crisis you can change the designation. Hopefully this process will be easier if you recognize that your estate plan does not to be perfect. It is better to have an imperfect plan than no plan at all.