Uncertainty makes most of us uncomfortable. It is something most wish to push aside however, much of what happens over the course of our lifetime is uncertain. Estate planning causes us to face the uncertainty of what may happen to our loved ones in the future. Let us discuss how we can protect what is important in the face of life's uncertainty.
Are you and your family protected if you unexpectedly became incapacitated? Incapacity can occur in many different ways and without any warning. If you were to become mentally or physically disabled, who would manage your assets, legal affairs, health care decisions and take care of you and your dependents? Have you considered who you would want that person to be? Do you have a trust, power of attorney, and advance health care directive that authorizes your chosen representatives to act on your behalf? If not, then be aware of what may be the alternative — an expensive, time consuming, and aggravating court supervised conservatorship proceeding. This is why estate planning is crucial.
With properly drafted trusts and powers of attorney in place, if you become incapacitated your chosen agents and successor trustees can manage your affairs and assets without petitioning for court authorization. What would you want done on your behalf? Estate planning ensure that your loved ones don't have to guess. You can provide general and specific instructions in your legal documents for your representatives to follow. We cannot presume that our first choice of representative will be available, able or willing to act. This is why alternative agents and alternative successor trustees should also be considered.
Ultimately, when you pass away, how will your surviving loved-ones manage without you? How will you make the painful process easier for them? Will they have to petition the court to probate your estate? Will their future circumstances mean that someone else should manage their inheritances — in further trust — or will their circumstances allow them to inherit directly? Will your intended loved ones even survive you or if not, are alternative beneficiaries effectively named to inherit your assets? By doing the proper estate planning now, these questions can be answered.
Retirement accounts, annuities and other pay on death beneficiary assets are often neglected when it comes to naming alternative beneficiaries. Do you know who would inherit such non-probate accounts if both the primary and first alternative beneficiary predecease you? Often parents name their spouse and then their children on such accounts but don’t update the death beneficiary designation when their spouse is deceased.
Naturally, estate planning requires careful consideration and professional guidance. Bad estate planning can produce worse results than no estate planning at all. Estate planning is best done in advance when there is no pressure of time constraints. Planning ahead increases the probability of having it done correctly when the time comes. It should periodically be reviewed and, if necessary, updated over the years to reflect changes involving your family, your wishes, and the law.
Some people prefer to avoid addressing incapacity and mortality issues because it is uncomfortable and they believe it is not immediately necessary. Procrastination is the path of least resistance when there is no compelling reason to act now. Nonetheless, if you do procrastinate you are not guaranteed to be able or have the opportunity to prepare and sign estate planning documents in your family’s best interest. Being proactive not only safeguards you and your family but also provides you with some peace of mind in the present. This is something that procrastination will never provide for you, no matter how long you wait.