DISCLAIMER: The purpose of this article is to provide general information which
is subject to change and is specific to state law. The author and
ReliaQuote are not providing legal advice. If you have a specific legal
issue, you should consult a lawyer who is licensed to practice law in your jurisdiction.
One of the biggest mistakes you can make in the area of
estate planning is to assume you do not need to plan. If you think you are
too young to prepare an estate plan or you think you do not have sufficient assets
to warrant such a plan, you are making this mistake. Estate planning is much more
than estate tax planning. Much of your estate plan will focus on providing you and
your family with protection in the event of an unforeseen illness or accident and
ensuring the well-being of your surviving family, rather than looking solely to
managing large amounts of wealth upon your death. The following are examples of
estate planning issues that require your attention regardless of your age or net
worth:
Incapacity Protection - Do you have a plan in place to ensure that financial,
administrative and medical decisions can be made for you in the event you are incapacitated
and are unable to make such decisions? If you do not, do you understand what will
happen upon your incapacity?
If you become incapacitated and do not have a succession of substitute decision?akers
in place to pay bills, sign legal instruments, file tax returns and otherwise take
over the management of your affairs, your family will have to petition the court
to name a personal representative who will be given the authority to take such actions
on your behalf. The problem with this process is that (1) it is expensive (there
are substantial fees associated with navigating the court system), (2) it is time
consuming (it will take time for the court-appointed personal representative to
be identified and put in place) and most importantly, (3) it is out of your control
(you will not have the ability to select your personal representative and will not
be able to determine the extent and make-up of their powers to act for you). If,
on the other hand, you have a plan in place whereby you have named a succession
of decision-makers and have determined the powers those decision makers will have,
the court (and the time and expense associated with the court? process) does not
have to be involved and you will maintain control over the process. One thing is
for sure: You cannot afford to wait until you need this protection to put it in
place!
Providing for Minor Children- Do you have a plan in place that protects your
minor children should something happen to you? Have you taken the opportunity to
designate guardians for your minor children? Have you ensured that your children
will be cared for and supported?
If any of your children are minors upon your death, the court will name a guardian
who will be responsible for caring for those children. To the extent that you have
not provided the court with guidance as to the individual(s) you believe are most
capable and appropriate to fill that position, the court will be trying to solve
a mystery without any clues and may not select the individual(s) you believe are
best suited for the job. On the other hand, you can take the opportunity now to
designate who you would like to serve as guardian(s) in the event you have minor
children upon your death. Just as with incapacity protection discussed above, the
issue here is whether or not you retain as much control over the process and its
outcome as possible. Take the opportunity to make your wishes known. Your children
are too important to go unprotected.
Providing for Your Surviving Spouse- If you were to die today, would your
spouse be able to continue to make the mortgage payments, fund your children? education
and generally support himself or herself? Do you have sufficient life insurance
coverage to guarantee the well-being of your loved ones? Your estate plan can ensure
the proper treatment of your assets, including the treatment of your life insurance
proceeds, and can protect your loved ones?future.
A well-crafted estate plan incorporates the use of beneficiary designations (associated
with your life insurance policies and retirement accounts), jointly owned assets
and the distribution scheme created in your Last Will and Testament or Revocable
Living Trust to ensure that the proper individuals receive the proper amount of
assets at the proper time and under the proper circumstances. Such a comprehensive
plan will ensure that your surviving spouse will have control over the assets and
will be able to use those assets to support himself or herself and your children
and, to the extent your children are to receive assets upon your death, will provide
a mechanism for directing the distribution of those assets to them or for their
benefit so that your children are not hurt by their inheritance. For example, your
estate planning documents can provide that any distribution to a particular beneficiary
under a certain age will be held in trust for that beneficiary and will be distributed
within the discretion of the trustee of that trust until that beneficiary reaches
the age where it is appropriate that they receive control over those assets. With
this type of planning, you can protect your beneficiaries and their ambition. The
future of your loved ones is far too important to leave unplanned.
These are just three examples of how estate planning is relevant to you whether
or not you are young or old, rich or poor. Please see an estate planning attorney
to get the protection you and your family need.
This article was written by C. Daniel Vaughan, Esq. C. Daniel (Dan) Vaughan is an
estate planning attorney with the law firm of Vaughan, Fincher & Sotelo PC in
McLean, Virginia . He is licensed to practice law in Virginia and other members
of his group are licensed to practice in Virginia , Maryland and the District of
Columbia . The group is focused on developing and administering comprehensive estate
plans tailored to individual needs and circumstances. Dan can be reached at (703)
506-1810 or by e-mail at dvaughan@vfspc.com.
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