In this article I would like to discuss the reasons to take care of estate planning this year. The benefits are not “I took care of my estate planning so now I have this thick set of documents in my fireproof safe. This feels great.” The benefit is found in knowing that you have done what is necessary as a parent, spouse, or provider to ensure that your family is cared for no matter what. Some concrete benefits are:
1. Maintain control of your health care decisions.
As we age the overwhelming majority of us will at some point, hopefully long in the future, end up in a hospital or other health care facility. While this is not a pleasant thought it is worth considering how we can best prepare for this. If you are unable to make decisions for your own health care ask yourself who would you want to make those decisions? It can be one person or a panel of people. It can be made up of loved ones, medical professionals, or a combination. It’s important that you make your wishes for your care known now while you are healthy so that they can be carried out when necessary.
2. Maintain control of your finances during incapacity.
A comprehensive estate plan allows the seamless control of your finances during your incapacity. Without proper planning while you are healthy your family will be forced to go to court for conservatorship proceeding should you become incapacitated. This is a waste of time and money. Not only does estate planning maintain but you can specify beforehand which expenses you want paid during incapacity such as tuition for grandchildren or the rent for your daughter. You can also specify which expenses you do not want paid.
3. Preparing financially for long-term care.
The last word one would use to describe long-term care is cheap. It is frighteningly expensive. It can destroy a lifetime of savings in a short period of time. Estate planning allows you to prepare for the costs of long-term care so that they don’t destroy the inheritance you would like to leave your loved ones.
4. Maintain family harmony.
Ask any hospital nurse or doctor if families are more or less likely to fight over the care of a loved one when there’s a plan in place as opposed to when there’s not. Ask any probate lawyer if families are more or less likely to fight when a plan is in place and the family is aware of it. Deciding upon your medical care and to whom your assets will go upon your passing keeps family infighting to a minimum.
I understand that while the above are compelling reasons to have an estate plan in place estate planning is still something that people put off. After all, you’re healthy so why even think about estate planning for a few decades?
Here are some considerations that helped inspire me to take care of my estate planning and maybe you’ll find them incentivizing as well:
Think about your children. Estate planning is a gift that you give your children. Estate planning is far more than just saying “I’m leaving my child X amount of dollars.” Estate planning is a way to protect your children. When your children are young and vulnerable you must appoint short and long-term guardians to raise them in the event something happens to you. When they are adults you will need various medical documentation, including HIPAA authorizations, to make medical decisions on their behalf. As you age you want your estate plan to leave them an inheritance in the way you intend. Your estate plan is not a document that’s signed and forgotten. It’s a living document and will evolve with that of your life and those of your loved ones.
Update beneficiary designations. Some of your most valuable assets are those that pass by beneficiary designation: simply who you have written down as the person to receive the money upon your death. These include life insurance policies and retirement accounts. Take an hour or so and call your life insurance provider and employer and make sure your beneficiary designations are up to date. Much, if not all, of your estate planning will have been for naught if upon your death a substantial sum of money passes to someone you did not intend. Reviewing beneficiary designations should be done once a year. Also, as you accumulate assets estate tax concerns, federal and New York, can come into play. Reviewing your insurance policy and retirement account allows you to better understand the size of your estate and concerns that may be on the horizon.
Your health. As we discussed previously, if you become incapacitated you do not want your family to fight over your treatment. Are you in favor or against life support? Exactly what type of life sustaining medical care are you comfortable with and which do you want to avoid? Medical care decisions are a very personal decision that must put them in writing while you are healthy.
Estate planning allows you to find comfort in knowing that some of the hardest decisions you or your family will ever have to face have been taken care of.
If you would like to take care of your estate planning, or have your existing estate planning reviewed, the best thing to do is call us at (646) 736-7539 and schedule a Family Wealth Planning Session. We typically charge $750 for this two hour meeting but we will waive the fee if you mention this article.