Less than half of U.S. adults have an estate plan, and the predominant reason is avoidance. Folks don’t want to face their own mortality, and they don’t want to thrust the topic on their loved ones. Talking about who gets what assets, how the family business will be divided, and who will play key roles in settling your estate is not fun stuff.
Even worse, though, is failing to have such conversations before it’s too late.
Should you pass before ordering your affairs, your loved ones will be forced to assume this labor…and it will neither be cheap nor easy, and could easily lead to irreparable conflict. This, however, is only the start of how estate planning impacts the whole family.
Understanding estate planning’s impact means understanding estate planning, itself. An estate plan is not just a roadmap to caring for your loved ones after you’re gone; it is also a set of instructions for how they can best care for you while you’re still living. What’s more, it is an opportunity for your family to deepen communication and better understand one another’s needs. Seeing all this begins with knowing an estate plan’s constituent parts.
What Goes into An Estate Plan?
Before you sign any documents, you need to talk to your loved ones. An estate plan begins with a conversation, and in this conversation, each member of your family should be given the time to share their concerns while you share your intentions and goals. However difficult, doing so is often a moment of deep bonding, and thus— from the start—an estate plan provides universal benefit.
The next step is to formalize your last will and testament, living will, medical and financial powers of attorney, and trust. These four documents form the core of any robust plan.
A last will and testament communicates how you wish your assets to be distributed upon your death. It is also a space to name guardians to any minor children and make bequests to individuals and institutions. Your last will and testament should contain no surprises, which is why it is important to talk with loved ones—not just about its content, but about its intentions, too.
A living will (sometimes called an advance healthcare directive) communicates end-of-life decisions concerning the sort of care you wish to receive while still alive. When tragedy strikes, families are often faced with agonizing decisions, such as whether to place a loved one on a breathing or feeding tube, to risk organ donation, or to administer dialysis. Having this document in place saves them this strife by outlining your wishes for a variety of possible situations.
Medical and financial power of attorney documents designate trusted loved ones to handle your medical and financial affairs, should you suffer incapacitating injury. Having these in place provides you the peace of mind of knowing you will not fall behind on important transactions, no matter the circumstances, and that you will have a strong advocate to ensure you receive proper care in the case of incapacitation. Like a living will, powers of attorney also help your family steer clear of conflict in moments of extreme stress.
Finally, a trust is a versatile tool often used to keep your estate out of probate and to minimize taxes. This is only the beginning of what a trust can accomplish, however, and so it is worth speaking to an experienced estate planning attorney or probate lawyer to learn about other applications that may benefit you and your loved ones.
For more on this subject, do not hesitate to join estate planning attorney Tammi M. Caress for a free workshop about how estate planning impacts each member of the family now, and later in life.