Have you been putting off making a will because the mere thought gives you the heebie-jeebies? Or is it that you believe you have plenty of time and can afford to wait a little longer to address an uncomfortable issue? Hey, waiting doesn’t make the job any easier and it could leave your family in the lurch if you shuffle off this mortal coil without creating an estate plan.
A will is one part of an estate plan and it tells all the people who matter how you want your assets to be distributed. Other, equally important, components of a solid estate plan are powers of attorney (POAs), which authorize another person to act on your behalf. There are two types of POAs and they both have to be enduring—they have to outlast you—to be useful. A financial POA identifies who will manage your money and under what circumstances while a medical POA identifies who will make your health-care decisions if you can’t make them for yourself. (Living wills are a nice idea but have no legal standing.)
If you have kids, your estate plan should also include a guardianship appointment so your kids end up being raised by someone you like.
You might also include a trust as part of your estate plan. A trust describes a relationship in which one person (the trustee) holds title to property on behalf of another (the beneficiary). A living trust is created when the settlor (the person giving the money) is alive. When a trust is set up through a will it’s called a testamentary trust.
Whether you wish to protect a same-sex partner from the prying eyes of family that hasn’t been so willing to accept your alternate lifestyle, or you want to save your spendthrift child from his financial demons, a trust can do the trick. And if you’re trying to protect a child who may be disabled and financially dependent, a trust could be just the ticket.
Still hesitating about creating an estate plan because you don’t want to spend the money? Don’t be shortsighted. Whatever you save today by not creating a plan, you’ll make up for in taxes and fees later on…never mind the squabbling that may ensue. The point of executing a well-thought-out, well-executed estate plan is to ensure things happen as YOU want them to. The idea is to make the whole transition from your control to someone else’s as neat, clean, timely and painless as possible for those you love.
Make sure you see a lawyer who is a specialist in estate planning. Or you can use your bank’s trust department for guidance. This is a very specialized area with arcane language and pernickety rules.You need someone who knows the ins and outs like the back of their hand to guide you.