Most older adults acknowledge that estate planning is essential. Yet, nearly half of Americans age 55 or older do not have a will, and even fewer have designated powers of attorney, a living will, or health care directives.
These legal documents help guide your representatives to provide the end-of-life wishes you seek. Estate planning also reduces the burden your loved ones face and lessens the potential for conflict among your family members after you are gone.
Whether you own a little or a great deal, every senior should have an estate plan. Your estate comprises your home, real estate, vehicles, businesses, bank accounts, life insurance, personal possessions, and any debt you may owe. The goals of your estate plan include:
- Establishing who will receive your assets upon your death
- Setting up a durable power of attorney
- Selecting a trusted representative to make health care decisions on your behalf if you become unable to manage your own affairs due to illness or injury
- Creating a will and trust
- Minimizing estate taxes
- Appointing your estate executor or representative
- Providing peace of mind to you and your loved ones
Four basic elements of an estate plan can help you achieve these goals.
Creating Your Will
This legal document, called a testamentary will, transfers your estate, after you die, to the individuals or charities you name. Naming your executor or personal representative is another function of your will. This individual will ensure your wishes are carried out. Many older adults choose their most responsible adult child for this role.
Advise the person you choose to manage their expectations and advise your family of what to expect in your will. This way, you can address questions they may have and stave off family confrontations after you are gone.
Your will needs to include the following:
- your named executor,
- a list of individuals or charities you wish to receive your assets,
- a list of significant assets to leave to heirs, and
- your debts (mortgages, car loans, credit card debts, etc.).
Be aware that if you have substantial assets in probate court, the process can wind up costing 10 percent of your estate value. (Probate is the legal proceeding where the court oversees the distribution of your assets.) This can add stress to your executor's role, as well as increase the time it takes for your family members to receive their inheritance.
You may wish to establish a trust; you can do so by working with an elder law attorney or estate planning attorney. Creating a trust can minimize taxes, restrict asset distribution, and also bypass probate. These trusts are usually a revocable or irrevocable living trust, special needs trust, or spendthrift trust. Your attorney can identify the trust type that best meets your needs.
Your Living Will and Durable Health Care Power of Attorney
A living will outlines your choices regarding end-of-life treatments and will come into play while you are still alive but unable to communicate health care decisions. Similarly, a health care power of attorney's decision-making will only be active when you become unable to communicate your wishes. The person you name as your durable health care power of attorney is typically a caregiver or family member who inspires the utmost trust.
Here are some general issues to consider when creating a living will:
- Medications you are willing or unwilling to have administered to you
- Permission for a feeding tube if you are unable to eat
- Permission to be on life support and, if so, for how long
- Willingness to accept palliative care at the end of life
- Having a do-not-resuscitate order or DNR
- Your decision about being an organ donor
If you have both documents, a living will trumps your health care proxy. Many older adults prefer to forgo a living will. They instead opt to rely on their health care proxy to make medical decisions on their behalf in the event that they become unable to communicate their wishes for treatment and life-saving measures. Whatever you choose, it is important to inform your loved ones of your health care preferences.
Durable Financial Power of Attorney
Much like a health care power of attorney, a financial power of attorney becomes active when you can no longer make financial decisions. The person you designate will manage your finances on your behalf. To alleviate excessive burden, consider appointing a different individual than your health care power of attorney. However, note that it is legally permissible to name the same person.
Your financial power of attorney should be highly trustworthy and financially stable. When selecting an individual in your life to fulfill this role, you may consider someone who not only lives near you, but is also willing and capable of serving. The individual must be financially responsible, trustworthy, and able to act in your best interests. Finally, this person should be proactive and assertive in protecting your finances.
While these documents represent the basics of an estate plan, your situation may require far more detail and nuanced expertise that an elder law attorney can provide if they do not also offer estate planning. Begin with a checklist including:
- A list of your assets and debts
- Assemble important supporting documents
- Choose candidates for the executor (personal representative) and powers of attorney
- Draft an outline of estate planning documents as listed above
- Talk with your family about your goals and wishes
Connect With an Estate Planning Attorney
When you accomplish these tasks, an experienced estate planning attorney or elder law attorney can review your efforts and put your plan into legal action. You will save time and money by being organized and having a basic understanding the estate planning process before meeting with an attorney.
Once all of your estate planning documents are complete, you'll have a sense of peace knowing you have a solid plan that best protects you and your loved ones. Find a qualified estate planning attorney near you today.
For additional information, review the following articles: