A proper estate plan allows the people of your choice to make decisions for you in the event you’re unable to do so.

 

By James Ward

James Ward

If you pick up most any complete financial advice publication, they’ll point out the importance of a good estate plan. In one publication of 99 tips for a great retirement, seven of the top 10 tips concerned estate planning.

I just read a publication that said it well. The author stated that estate planning is the most important element of all financial planning. Think about it. As the writer pointed out when encouraging even young people to get an estate plan in place, “although the probability of premature death or complete incapacitation is extremely low, the damage it can do to one’s plans for life and money without an estate plan can be catastrophic.”

Yes. Catastrophic.

To do it right, an estate plan takes both time and money. Doing it right requires the thoughtful advice of an experienced estate planning attorney, and, of course, it requires the proper legal jargon to support your wishes. You need to address several “what if” scenarios with an experienced professional who has the right legal background.

For every person you nominate as Agent under your Durable Power of Attorney or Advance Healthcare Directive, or as Personal Representative of your will, or as Trustee of your trust, you need alternative back-up people who can act in the event that your first-choice person is unable or unwilling to act.

In most cases, married people will name each other, but who else do you have if your spouse cannot act for you? Who would raise your children? Who would handle the finances? Who would be charged with spending your money for your care if you’re incapacitated?

If your parents are young and healthy, they may be good choices now, but will they still be able to act and manage the finances until your children reach the age of 25 or 30? How about naming someone else at least as the back-up to your parents?

Who do you trust to raise your children? Who will properly allocate your assets for the balancing act of paying for your care and simultaneously paying for the care of your children?

A proper estate plan allows the people of your choice to make decisions for you in the event you’re unable to do so.

It sets out the rules for the assets you leave behind, and it sometimes even establishes the level of care for those left behind.

Preparing a good estate plan is often described as an act of love for others. Don’t leave things a mess when you depart unexpectedly.

And, one more thing on asset distribution. Retirement accounts, life insurance, and annuities generally move to a beneficiary through the beneficiary statement of those assets, and that beneficiary statement generally takes priority over the stated wishes in a trust or will.

Even if your estate plan has been prepared properly, you still need to check that you have the right people named on all beneficiary designations.

If you’re divorced, do you still want your former spouse to collect? If you named your oldest son as the beneficiary, and he’s now incapacitated, do you still want him to collect and potentially have him lose his disability benefits? If he dies, who gets those assets?

If you don’t have a professionally prepared estate plan in place, get one done now. Think about care for yourself and your spouse. Think about the others who will be left behind.

James Ward lives in Morgan Hill. He went to law school in New England and earned a post-graduate law degree in Estate Planning at the University of Miami. Jim worked as an Estate Planning and Elder Law attorney in Florida, and then returned to South County to open his law firm focusing on Estate Planning and Elder Law. He has offices in South Valley and Willow Glen.