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What is an estate plan?
According to Meriam Webster, the legal definition of estate planning is “the arranging for the disposition and management of one’s estate at death through the use of wills, trusts, insurance policies, and other devices.”
All adults should plan their estates, but some procrastinate when it comes to estate planning because they feel uncomfortable thinking about their death. Other people believe that estate planning is only for people who are wealthy. However, this is not true. Wealth status and uncomfortable feelings aside, an estate plan is essential for senior adults and their families.
What is included under an estate plan?
The estate is all property owned both individually and jointly if married. The property includes but is not limited to bank accounts, real estate, jewelry, vehicles, family heirlooms, other items of value, and what is owed. The estate plan serves to carry out a person’s wishes regarding the distribution of the estate itself, as well as end-of-life decisions and medical care.
There are five essential components that should be included in an estate plan.
A will is a legal document that manages an individual’s estate once they are deceased. It manages the distribution of assets, names beneficiaries, and appoints guardianship for any dependents or minor children. The will provides for an executor of the estate that will be responsible for the estate management, paying debts, and distributing property as specified. In addition to estate management and guardianship, a senior adult can include specific instructions regarding their funeral or burial service.
It’s important to note that a living will differs from a will. A living will is a legal document that outlines a person’s wishes for end-of-life medical care. In the event that an individual cannot communicate or make informed decisions, a living will specifies what medical care, treatments, life-sustaining measures, or organ donation preferences one would or would not want if in a vegetative state or terminal condition. A living will is important for both the individual and the loved ones involved. For the individual, it protects their autonomous wishes. For loved ones, it eliminates the stress that comes with making such important decisions on behalf of someone else.
Health Care Power of Attorney
A power of attorney may also be referred to as a health care proxy. It is a legal document that designates a trusted individual to make medical decisions on behalf of the elder if they are unable to do so.
A power of attorney is utilized if an individual can no longer make informed decisions for themselves, regardless of whether or not they are at the end of life. The individual appointed as power of attorney can make decisions regarding medications, procedures, diagnostic exams, surgical interventions, long-term care management, and end-of-life care matters.
Financial Power of Attorney
The financial power of attorney authorizes someone to act in the place of the senior adult for matters relating to finances. The authorized individual will take over all financial matters if the senior adult cannot handle their own affairs. Financial matters may include but are not limited to paying bills, handling taxes, real estate affairs, and decisions pertaining to investments.
A trust is a type of relationship where specific property is held by a third party, or trustee, for the benefit of another party, the beneficiary. The trustee holds that property for the beneficiary. The trust-maker still retains legal ownership and control when living. At the time of death, the trustee will distribute the property to the beneficiary.
Setting up a trust can be beneficial for distributing specific assets or pieces of property. With a trust, the distribution of property can be done without the court. It also allows for privacy, whereas a will does not. With a will, the deceased person’s assets and terms of their will are made public. Depending on the specific asset or property, privacy may be preferred.
An estate plan is necessary for anyone who wants a say regarding their end-of-life care and asset management after death. Having an estate plan in place protects an individual’s wishes and provides peace of mind to all involved.
Consulting and planning with an elder law attorney will help ensure all options are explored and informed decisions are made. Working with an elder law attorney provides guidance and explanations as you or a loved one navigates this process.