Having an estate plan is the most important step you can take to protect yourself and your loved ones. Proper estate planning not only puts you in charge of your finances, it can also spare your loved ones expense, delay and frustration associated with managing your affairs when you pass away or become disabled.
Providing for Incapacity
If you become incapacitated, you won’t be able to manage your own finances. Many are under the mistaken impression their spouse or adult children can automatically take over for them in case they become incapacitated. In order for others to be able to manage your finances, they must petition a court to declare you legally incompetent. This process can be lengthy, costly and stressful. Even if the court appoints the person you would have chosen, they may have to come back to the court every year and show how they are spending and investing every penny. If you want your family to be able to immediately take over for you, you must designate someone you trust in proper legal documents so they will have the authority to act on your behalf in all financial and legal transactions. A will does not take effect until you die, you need to have a power of attorney to allow your chosen representative take over when you cannot manage your affairs.
You should have a plan for your medical care. The law allows you to appoint someone you trust, for example, a family member or close friend to make decisions for you about medical treatment if you lack the ability to decide for yourself. A durable power of attorney for health care will designate the person to make such decisions. In addition to a power of attorney for heath care, you should also have a living will which informs others of your preferred medical treatments such as the use of extraordinary measures should you become permanently unconscious or terminally ill.
If you die without a will, the state laws will determine how your assets will be distributed. The process can be expensive and time-consuming. If you want to make sure that you determine who receives your assets after your death, you need to have a properly executed will.
Providing for Minor Children
Your estate plan should address the upbringing of your children. If your children are young, you may want to consider a plan to allow your surviving spouse to devote more attention to your children, without the burden of work obligations. You may also want to provide for special counseling and resources for your spouse if you believe he or she lacks the experience or ability to handle financial and legal matters. You should also discuss with your attorney the possibility of both you and your spouse dying simultaneously, or within a short time. A contingency plan should provide for persons who would manage your assets as well as the guardian you’d like to nominate for the upbringing of your children. The person in charge of the finances need not be the same person as the guardian. You may want to purposely designate different persons to maintain a system of checks and balances. Otherwise, the decision as to who will manage your finances and raise your children will be left to a court. Even if you are lucky enough to have the person or persons you would have wanted selected by the court, they may have undue burdens and restrictions placed on them by the court, such as having to provide annual accounting.
Other issues to consider in this respect is whether you’d like your beneficiaries to receive your assets directly, or you prefer to have the assets placed in trust and distributed based on factors you designate, like age, need and incentives based on behavior and education. All too often, children receive substantial assets before they are mature enough to handle them properly, with devastating results.
You should give careful thought to choosing a guardian, someone who shares the values you want instilled in your children as well as considering the age and financial condition of a potential guardian.
If you need assistance with estate planning, contact Hampton Roads Legal Services at (757) 320-2010. We can prepare a will, an advanced medical directive to allow someone to make medical decisions if you are incapacitated and a Springing Power of Attorney which will allow the individual you trust to take over your financial affairs if you are incapacitated. If you have all three documents prepared at the same time, we have a special rate.