Natural disasters, like the current coronavirus pandemic, create a lot of stress and uncertainty in life. While no one can ever fully prepare for these events, having an estate plan in place can provide some peace of mind. If you are no longer able to make decisions for yourself due to illness or injury or if you were to die, your loved ones won't be burdened with decision-making and/or dealing with your estate without knowing your wishes.
What Is Estate Planning?
Your estate plan will provide direction for your loved ones as well as help avoid tying up your financial assets in probate court, which can take a good deal of time as well as money. "Estate planning is a set of written directions that say, 'if I'm incapacitated, here is who I want to make medical and financial decisions for me," says Sherri Stinson, Esq., an estate attorney. "If I'm dead, here's who I want to inherit what I own in the way that I want them to inherit it.'"
Stinson says that estate planning helps give the owner of the estate a sense of control as well as helps prevent arguments among your family. She says, "Putting your wishes in writing is a way to giving clear instructions about your intent. Putting your health care and financial wishes in writing mean that nobody has to guess about what you wanted to happen."
Who Should Have An Estate Plan?
Whether you are a young person with no children and very few assets or midlife with considerable wealth, many properties, and a number of grandchildren, you should have an estate plan. Somita Basu, an estate planning and probate attorney with NortonBasu LLP, recommends that, while many people don't think they need an estate plan because they don't own much, everyone should have an estate plan of some kind.
"Estate planning is about leaving what you own to whomever you want," Basu says. "If you don't have an estate plan, the state has one for you, but chances are you won't like it. An estate plan can help you avoid probate, plan for estate tax complications, and make the transfer of your assets a smooth process for your loved ones at a difficult time."
Additionally, Basu advises estate planning for all due to the possibility of serious illness or injury. "A comprehensive estate plan [a living trust, a pour-over will, a power of attorney, and an advanced health care directive] can protect you in case of incapacity [due to a medical emergency or dementia] as well as protect your family in case of death," she says. "Especially during times of crisis, having your affairs in order can bring peace of mind."
What Should Be Included In An Estate Plan?
An estate plan should include all financial directives, medical treatment planning, and if you have minor children, directions on guardianship for them. Your estate planner should walk you through an estate planning checklist to help you gather any necessary documents in addition to compiling an inventory of your possessions and assets.
John Bodrozic of HomeZada, a digital home management company, suggests that without a home inventory, people often don't realize what they own. "Most homeowners do not have a home inventory. Many people have not itemized their personal property as it relates to their estate plan on how they want their property distributed at the end of their life," Bodrozic says. Using a home inventory app such as HomeZada can help you in estate planning.
Stacy Hanley, an estate planning lawyer for Lefkoff-Duncan, knows that natural disasters provoke fear and anxiety. She says, "If you do not have an estate plan in place, then you are left vulnerable to this fear and anxiety. But taking steps to protect ourselves and our loved ones though estate planning is something we can control."
Hanley recommends the following documents be included in your estate plan:
Will: A will is a legal declaration in writing of an individual's intention regarding the property of that individual after his/her death. A will may also include the appointment of a guardian for minor children.
Power of Attorney: Under a power of attorney, you can designate someone to act in your name and exercise your rights with respect to any property you own. This is beneficial if you become incapacitated.
Advance Directive for Health Care: Under an advance directive for health care, you can delegate to someone of your choice the power to exercise virtually all rights you have to accept or reject medical care. Then, if you are incapable of indicating your intent, your physician may rely on the power holder to make all medical decisions, including the power to continue or terminate life support systems.
Having an estate planner walk you through an estate planning checklist so that you can gather the necessary information and documentation will help ease your mind in the event of a natural disaster or illness. Doing so before disaster strikes will save you needless stress and worry.