The benefits of Estate Planning
Fri Nov. 22nd 2019
The old saying goes "you can't take it with you." Whether you have one precious heirloom or a string of hotels across the country, having a plan in place before you die (or lose your marbles) for what happens to you and your property is both good for you and your family. Leaving it too late means you can't decide, and that's no good for anyone.
What's involved in an estate plan
Everyone should have a will, but your estate plan will also include a living will, and enduring powers of attorney who you appoint to make decisions regarding your property and medical care when you no longer have the mental capacity to make these decisions yourself. Each of these documents is legally binding and maps out what happens to you and your assets at different stages of your elderly life. For example, your will is only active after you die, but other documents, like your living will, are designed to come into play before that.
It can be a lot to manage on your own so there are professionals who can help like lawyers and financial advisers.
Why you need an estate plan
We've all heard about the expensive, drawn-out, legal nightmare families go through when a family member dies without a will. As we live longer, and the rate of dementia increases, it's important to get your estate plan sorted early.
If you get to a point where you can't make your own decisions, your power of attorney (someone you trust) makes those decisions on your behalf. Similarly, a living will states your care preferences when you're no longer able too. Then there's taxes – it's possible to have your estate organised in a way so less tax is drawn off and your heirs are entitled to more inheritance.
Once your plan's in place, you can relax (a bit) knowing you've done your family a favour.
What you can put in a will
Besides naming who you bequeath your things to, you'll also need to choose an executor – a person you trust to carry out the terms of your will. Make sure that
person knows what's involved including settling outstanding accounts, making sure assets are distributed as you have specified, and paying what remains of any tax. Don't forget to ask them before you choose!
You can also appoint a guardian for any dependent children you may leave behind, otherwise this decision is made by the courts. Again, talk to your chosen guardian to make sure they agree.
You might have favourite charities or organisations that you want to benefit. These are called bequests and the amount they will get from your estate is included in your will.
Be careful what you put in your will - it pays to double-check who's named as beneficiary of your insurance policies or financial accounts first, then change those names if necessary.
Keep your will up to date
Our lives are constantly changing meaning wills are often out of date. Your financial situation or relationship status may change, a new grandchild may arrive, dependent children grow up. It's a good habit to update your will every couple of years or immediately if you know things have changed.
Make a living will at the same time
If you have strong preferences about your medical care, put them in a living will. That way, your family and medical staff know what your wishes are if you can't tell them yourself. More often than not, this is something people don't think about. If you had a serious stroke, would you want medical staff to keep you on life support? You can specify things like a DNR (do not resuscitate) order, among other things, as part of your living will.
How enduring power of attorney works
Enduring power of attorney (EPA) is more important than ever these days as our life expectancy gets older. If you can't look after yourself for any reason, it's good to have someone you trust lined up to legally manage your affairs. That's when having EPAs in place is crucial. There are two types: one covers your medical care, the other your property.
Your lawyer can set up your EPAs and you can choose to have one person for both property and medical, or a separate person for each. It's important these are done early, that you choose people you absolutely trust and they accept the responsibility. Once you're deemed unfit to make decisions on your own by a specialist, your power of attorney takes over.
None of us know exactly how long we've got – for all you know you could get hit by a bus tomorrow. That's why getting your estate planning sorted early is essential.
Start by making a list of everything you own. Include things that have monetary value like your home, stocks and shares, or the family silver. Also include things you value emotionally, whatever their market value might be – Gran's wedding ring, heirloom art, the letters your forebears wrote to each other during The Great War.
Then decide who and where you want everything to go. Who will value your ancestors' letters? Who goes on the list of heirs? What charities do you want to benefit? Most importantly, who can you trust, not just as an executor of your will, but to take on the responsibility of enduring power of attorney? Is that one person or several?
Talk to your family
Make sure you sit down and talk to everyone involved with your estate before locking in the details – that way there will be no surprises. Ask permission of those who you would like to take a specific role and discuss where and who items will go too. Not everyone will have a place for heirloom art, or room to store old letters. Including your family in the discussion will also help them to understand your decisions. Deciding who gets Gran's ring well ahead of time can save your family from a lot of aggravation when you're gone.
Make a plan and keep it up to date
Establishing an estate plan doesn't mean you expect to kick the bucket soon. After a few conversations with your lawyer, financial adviser, doctor and family, you'll realise how sensible it is to start planning early. List your assets, choose your executor and attorneys carefully, make some decisions about your property and get those important documents drawn up – your will, living will and EPAs.
It's good to get the spade-work done, but the job isn't over. Review your plan every few years to keep it current and be ready to revise it when anything major changes.
Arranging an estate plan might not be as expensive or timing consuming as you think. At Cave Financial we can take the hassle out of arranging the paperwork, and lend a hand in helping you understand jargon and legal terms. Consult an expert at Cave Financial for more information.
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