You have a fairly small estate, and you’re not worried about estate taxes. You really think that your will and other steps you’ve taken are enough to prevent your family from having to go through probate after your death. So, should you work on an estate plan?
Interestingly enough, your estate plan doesn’t only help you protect your estate after you pass away. It’s also a plan that can include protections for yourself and dependents while you’re still alive.
Some items that you can include in your estate plan that may help you or your dependents during life include:
- Choosing a health care proxy
- Setting up guardianship
- Choosing someone to have financial power of attorney
- Setting up trusts
How do these parts of your estate plan help during your lifetime?
Health care proxy
A health care power of attorney, or your health care proxy, is an important individual who can make health care decisions on your behalf when you’re unable to do so. This person may be the one who makes decisions if you’re suffering from dementia or other conditions that make you unable to make decisions for yourself.
In the case that you’re unable to care for your children or dependents, a guardian can step in and take on your role. They will be responsible for providing physical, financial and emotional support to your dependents (or yourself, depending on the guardianship).
Financial power of attorney (POA)
Choosing who has financial POA is important, because that person will be in charge of making financial decisions for you if you can’t. For example, you may be unable to pay bills or debts if you’re hospitalized, so your POA can do that for you.
Finally, trusts can be beneficial even before death. For example, an irrevocable trust may hold assets out of your name, so that creditors have no way to access them. Additionally, those funds or assets won’t be included in your income for the purposes of Medicaid or other benefits programs.
As you can see, estate planning isn’t just about making decisions on how your assets will be distributed to heirs or how you want your funeral to look. It can help you establish rules for how your personal affairs are handled if you are disabled or unable to care for yourself or your dependents in the future.
Your attorney will talk to you about your estate plan and how you can take steps to protect yourself, your assets and your beneficiaries in life and after your death.