Estate planning is relatively simple. Its about putting your affairs in order while living and in death.
Whether you are single, married or a parent, it’s important that you have things in place.
Estate planning consists of:
- Last Will and Testaments
- Living Wills/Medical Directives/Health Care Proxies
- Trusts
- Life Insurance
You can have all of them in place or just one.
I spoke about all of them in the past, but here is a brief summary for each.
Last Will and Testaments (LWT)
LWT are designed to set forth your wishes so your family and friends do not have to assume and guess after your passing. In short, wills are your voice when you are no longer around to speak for yourself. Your family and friends are dealing with the emotions of your passing. Your will lets the world know what you would like to be done with your possessions, your assets, and how to provide for your dependents.
Living Wills/Medical Directives/Health Care Proxy
Advance directives and living wills are legal documents that give instructions to your family members, health care providers, and others about the kind of care you would want to receive if you can no longer communicate your wishes because you are incapacitated by a temporary or permanent injury or illness. Not wanting mechanical ventilation or a feeding tube, etc.
Health care proxy is a legal document that nominates individuals to make certain kinds of decisions on your behalf in certain medical situations. Most people nominate their spouse or offspring. While practical, it should be someone who is unrelated to you or will execute your wishes and not be clouded by their feelings. Often, I see family members being hopeful and making the ill undergo unnecessary procedures to stain life and the individual is alive on the outside but dead on the inside. The person nominated is left with a hard task and decision indeed. There should be no other influences involved in making a decision. It should be based on fact and reason.
Trusts
Trusts are written agreements designed to protect your assets from creditors, family members (inheritance) and spouses, and other parties that may want a piece of your assets. Trust agreements can be used for various purposes to achieve your goals.
Life Insurance
Life insurance is a contract between an insurance company and a policy owner in which the insurer guarantees to pay a sum of money to one or more named beneficiaries when the insured person dies in exchange for premiums the policyholder pays during their lifetime.
