Many believe that estate planning is simply instructions on how to distribute your assets when you pass away, but the reality is that proper estate planning can do much more. While one major benefit of estate planning is to provide for your family and friends when you are gone, there are many benefits for you as well.
Additional Benefits of Estate Planning
Life can give us surprises, both good and bad. Estate planning can help you be prepared for some unfortunate surprises in life. This is because proper estate planning includes planning for you and your care in the event you become incapacitated.
One tool used to address your care in the event of incapacity is a financial power of attorney. This legal document allows you appoint someone to manage your finances and property on your behalf. A financial power of attorney can go into effect as soon as the document is signed, allowing someone to act on your behalf immediately, even if you are not incapacitated. Alternatively, power of attorney can be “springing,” only going into effect in the event you become incapacitated (as determined by a physician). You can determine which type of financial power of attorney fits your unique situation.
Another estate planning tool that can protect you in a time of need is a medical durable power of attorney. Also referred to as a healthcare directive, this legal document lets you name a trusted person to make medical decisions on your behalf when you are unable to do so yourself. It also gives you an opportunity to lay out some of your wishes regarding your medical care.
A document called a living will can also bring peace of mind to both you and your loved ones because it provides instructions on what type of end of life medical care you want. Sometimes referred to as an advance directive, a living will is often paired with a healthcare durable power of attorney.
Finally, the use of a revocable living trust can be beneficial in the event you become incapacitated. When you are healthy and have capacity, you are typically the trustee of a revocable living trust, able to manage the assets and use them for your benefit. However, the trust instrument also allows you to name a successor trustee who will step into your shoes to manage the assets when you are no longer able to act due to incapacity or disability. Successor trustees also have a duty to continue to use the assets for your benefit.
Plan Ahead for Peace of Mind
Having a properly drafted estate plan that includes the documents described above can help protect you during your lifetime. Failure to have these documents in place may result in your loved ones going before the court to have someone appointed to make financial and medical decisions for you. This process, often called “living probate,” is lengthy, expensive, and stressful – not to mention part of the public record – during a difficult time when your loved ones are already dealing with the incapacity of someone they care about – you!
If you have questions about any of these legal documents or how to protect yourself through estate planning, give us a call to learn about your options under applicable law.