|Helena S. Mock, Esq.|
In 2008, Congress designated the third week in October as National Estate Planning Awareness Week. Over 55% of Americans do not have a proper estate plan in place, and this number increases for minorities. Estate planning is important for adults of all ages, no matter your income level or how much you have to leave behind. An estate plan is necessary to protect both yourself and your family in the event of illness, accident, incapacity, and death. So, what is an “estate plan?”
An estate plan is a collection of legal documents which are created now, while you are healthy and competent, to ensure that people of your choosing are in place to make decisions and take action for you if you become incapacitated and, ultimately, at the time of your death. A comprehensive estate plan will include the following documents: A revocable trust and/or a will, a medical directive (also called a health care power of attorney), a durable power of attorney (sometimes referred to as a property power of attorney), a living will (optional), and a HIPAA declaration. These documents work together to protect you during lifetime and then ensure your assets pass to whom you want, when you want, and in the way you want after your death.
Estate planning is for EVERYONE. Not just the “older” client and not just the “wealthy” client. Young couples with children need to plan for what happens if both parents die before the children are adults. Spouses with children from prior marriages need to plan for the protection of assets and division between the spouse and children. Individuals with children or other beneficiaries who are disabled or who have other “special needs” must plan for protection of the assets if the beneficiary is receiving government assistance such as Medicaid or SSI. Children and grandchildren going off to college need to have at least a power of attorney, medical directive and HIPAA declaration so that if something happens, parents can step in without the need for a court guardianship. Everyone needs some sort of estate plan in place, but that’s not the end of the story; once the plan is done, it should be regularly reviewed.
As important as establishing your estate plan is keeping your plan current. Periodic reviews are a must to ensure your plan will work as intended when needed. Family situations change, health situations change, assets change, and laws change. As a result, we recommend a review every 5 years up to age 70, and thereafter every 3 years to ensure that the documents are always up to date.
One of the biggest reasons people either don’t establish an estate plan or don’t keep it current has to do with cost. The overwhelming consensus is that lawyers charge too much. No one says this about doctors because health insurance covers most of the cost of the services provided by the doctor. Without insurance, though, many people would, and in fact do, go without needed examinations, treatments, and medications because they just cost too much. But what are the consequences of these decisions?
Obviously, your health is of paramount importance, which is why most people can see the value in paying for medical services. But what value is found in paying for legal services, specifically paying for an estate plan? The value is found in the intangibles such as peace of mind, security in knowing your family will be protected, comfort in knowing that you will be taken care of by people of your own choosing, minimization of future expenses, taxes, and court costs, and relief in knowing that you have made things easier for your spouse or children to take care of things when you can’t. As the commercials say, the value of these intangibles is “priceless.”
So, don’t be one of the over 55% of Americans going without an estate plan. If you don’t create a plan of your own, the Commonwealth of Virginia has a default plan for you, but it may not be what you want, or what your family needs. Make it your goal to complete, or update your plan before the end of the year. You will be glad you did.