Despite recognizing the importance of estate planning, nearly half of Americans age 55 and older do not possess a will, a power of attorney, or a living will. These documents help guide your representatives to provide the end-of-life wishes you seek. Estate planning also reduces the family burden and stress caused by conflict among family members after you are gone.
Whether you own a little or a lot, every senior should have an estate plan. Your estate comprises your home, real estate, vehicles, businesses, banks accounts, life insurance, personal possessions, and any debt you may owe. The goals of your estate plan include:
- Establishing beneficiaries
- Setting up a durable power of attorney
- Selecting a representative to make healthcare decisions on your behalf if you become incapacitated
- 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.
This legal document, called a testamentary will, transfers your estate to beneficiaries after you die. 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 your named executor, a list of beneficiaries (individuals or charities), 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 legal proceeding where the court oversees the distribution of your assets – the process can wind up costing ten percent of your estate value, adding stress to your executor’s role, and increasing the time it takes for family members to receive their inheritance. Speaking with an elder law attorney to establish a trust can minimize taxes, restrict asset distribution, and 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 Healthcare 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 healthcare decisions. Similarly, a healthcare power of attorney’s decision-making will only be active when you become incapacitated. The person you name as your durable healthcare power of attorney is typically a caregiver or family member who inspires the utmost trust.
General questions to consider when creating a living will may include:
- 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
- Accepting 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 healthcare proxy. The majority of older adults prefer to forgo a living will and rely on their healthcare proxy for medical decision-making in the event of incapacitation. Whatever you choose, it is important to inform your loved ones of your healthcare preferences.
Durable Financial Power of Attorney
Much like a healthcare 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 and, to alleviate excessive burden, should be a different individual than your healthcare power of attorney. However, it is legally permissible to name the same person. Your candidate should be highly trustworthy and financially stable. When selecting a financial power of attorney, things to look for may include someone who lives near you and is 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
When you accomplish these tasks, find a qualified Estate Planning Attorney near you to review your efforts and put your plan into legal action. You will save time and money by being organized and better understanding the estate planning process before meeting with your attorney. Once complete, you’ll garner a sense of peace knowing you have an estate plan that best protects you and your family.