Most people who come to me seeking estate planning advice want to ensure their loved ones are well taken care after they are gone. This is an admirable and important goal, but it should not be the number one focus of an estate plan. The central aspects of an estate plan should actually focus on taking care of the plan’s creator.
The following post will cover the two most common parts of an estate plan, which both happen to have the creator’s interests at their heart.
The Advance Medical Directive
Whether you call it an advance medical directive, a power of attorney for health care, or a living will, you are talking about the same thing. The “thing” being a document that gives another person the legal authority to make healthcare decisions on your behalf if you are unable to make decisions for yourself.
Some people are afraid to create this sort of document because they have heard that it means you are giving away your health care decision rights immediately. That is not true. The document only goes into effect when it is needed. If a debate arises of whether it is needed, for example if you get older and your children try to force you into a nursing home, you can ask a court to decide if you are in good enough health and have a sound enough mind to continue making your own decisions.
The document also doesn’t grant your designated caretaker carte blanche. You lay out your wishes and set guidelines for your care that your designee must follow.
A Revocable Living Trust
The second most common estate planning tool that also happens to be all about caring for yourself is the revocable living trust.
A revocable living trust, which is sometimes called just a living trust, is a powerful estate planning tool that allows you to remain in control of your assets during your lifetime, but also sets up a system so your assets in the trust will be managed for you if you are incapacitated, and then efficiently and privately transfers them to your loved ones after your death.
The biggest benefit of a revocable living trust is the privacy it offers. It allows you to avoid probate at death, keeping information about your assets and your wishes for them out of the court system and away from prying eyes. While you are alive, it gives you peace of mind because you know if you have an accident or something, and wind up in the hospital, your designee can step in and manage your financial affairs without going to court.
Once again, your designee can’t go wild with your assets and do anything they want, they must follow any directions you incorporate into the trust.
Looking Out For Number One
It may seem selfish to think about estate planning for your own benefit, but really there is no better way to take care of your loved ones than to make sure your own affairs are in order. Plus, if you are ever incapacitated, they will appreciate how easy you made it for them to make health care and financial decisions on your behalf.