What is Estate Planning?
Estate planning involves planning for how an individual’s assets will be preserved, managed, and distributed after death. It also takes into account the management of an individuals’ properties and financial obligations in the event that he or she becomes incapacitated. A lot of people have a rather simplistic view of estate planning: they believe that it’s the way to tell their family who gets their stuff when they die. Estate planning is much more than that. You want to think about your estate plan in two parts: what happens when you’re alive and what happens when you die.
Let’s start with being alive. Whether you are young or old, rich or poor, unexpected things happen in life. Along with the good times, there are going to be bumps in the road. A proper estate plan should make managing those bumps easier. In the case of a “big bump” such as becoming ill or incapacitated, your estate plan should include documents that will let someone you trust make legal, financial, and medical decisions in your place. Otherwise, these decisions will be made for you by the court. In addition to making sure your wishes are carried out in a timely manner, a proper estate plan could also save between $3,500 – $6,000 in court costs and legal fees.
Now for the death part. Everybody eventually dies. You don’t need a lawyer to tell you that. Your will is your set of instructions as to how you want to distribute your savings, property, and other assets upon your death. Typically, people leave their property to a relative, friend, or charity. Your property may be distributed all at once, or in the case of a young heir, over time. There are many factors to take into account when creating your estate plan, including your age, the ages of your beneficiaries,) your salary, savings, assets, marital status, and children. But life doesn’t stand still: salaries may increase or decrease; assets come and go; children grow and form families of their own, and laws change.
At what age should I start planning my estate?
NOW! Once someone reaches the age of 18, it makes sense to start. Will you need a complicated plan? Not likely. But everyone should have a Health Care Proxy, a Durable Power of Attorney and a HIPAA release so that a trusted agent (family member, partner or friend) can act on their behalf to make financial, legal and medical decisions should they become incapacitated.
Is a Living Will the same as a Will?
Not at all. A Living Will, also known as a Personal Directive or Advance Directive, acts as guidance to loved ones as to your wishes regarding end-of-life medical treatment should you develop a terminal illness or become seriously injured and unconscious. A Living Will is not a legally binding document in Massachusetts. It can prove invaluable, however, in providing directions to loved ones, particularly in large and blended families. A Last Will and Testament is a legally binding document recognized by the court that disperses your assets in accordance with your wishes after you have passed.