One of the most widely circulated myths surrounding estate planning is that it is only for the wealthy. We want to make sure you don’t fall for this false way of thinking so that neither you, nor your family, has to suffer the consequences. Estate planning is something that every person – no matter their income level – should take the time to do, and in this blog, we’ll tell you why.
What Does Estate Planning Entail?
Estate planning is a process which involves working with an experienced attorney to utilize certain legal tools which accomplish several things at once. The first goal of estate planning is to make the transfer of your assets (money, property, and other belongings) to your heirs as seamless as possible after your death. Without this roadmap, things get messy: your loved ones are liable to begin bickering over who gets what, and the court will get to make the decisions which are rightfully yours while also siphoning out a significant amount of money from your estate along the way.
Additionally, estate plans are important for ensuring your voice is heard, even if a tragedy takes away your ability to speak for yourself. For instance, a living will (sometimes referred to as an advance directive) allows you to express your preferences for medical treatments, procedures, and end-of-life care to healthcare professionals, even if you become incapacitated. You could also create a healthcare power of attorney document which gives a trusted individual the ability to make those decisions on your behalf.
Customarily, a comprehensive estate plan includes the following tools:
- A will
- A trust (or a combination of several trusts)
- Power of attorney
- A living will
- Guardianship designations, and
- Beneficiary designations.
As you can see, your income level does not negate the importance of estate planning. Let’s discuss the reasons why more thoroughly.
Regardless of the size of your estate, having a plan ensures that your assets are distributed according to your wishes. As already stated, chaos ensues when a person passes away without any plan or direction for how they wanted their money and property distributed. While a will does benefit your family in that aspect, a will alone won’t keep your estate out of probate, which is an incredibly long, expensive, and stressful court proceeding. It’s in your best interest to have both a will and trust that not only ensure your wishes are explicitly communicated, but that they can also be seamlessly carried out after your passing with minimal downtime.
Without either a will or trust, your assets will be left in the hands of the court. The Alabama laws of intestate succession will determine how your estate is divided and distributed, which will not take into account your intentions, nor your family’s unique dynamics. Essentially, you won’t be in control of any of the wealth you have spent your whole life building!
Estate planning is like arranging your financial chess pieces so that you pay the least amount of taxes possible. Big estates, small estates — everyone can play this game. By being proactive and figuring out smart strategies with your knowledgeable estate planning attorney, you can make your money work smarter. They’ll help craft a plan that suits your goals and keeps your hard-earned cash where it belongs.
Guardianship For Minor Children
If you have minor children, estate planning allows you to designate a guardian who will care for them in the event of your death or incapacitation. This ensures that your children are placed in the care of someone you know, trust, and who understands your parenting style and values. This aspect of estate planning has nothing to do with your wealth, and is something that every parent should consider having in place. Without it, as with many of these other crucial decisions, the government will be the one to make it.
Healthcare And Financial Decision Making
Estate planning includes documents which allow you to appoint individuals called agents to make financial and healthcare decisions on your behalf if you become incapacitated. This is relevant for everyone, regardless of income level. Some examples include:
- Durable power of attorney – can be used for financial and legal matters, and the authority granted to the agent continues, even if you become incapacitated
- Non-durable power of attorney – can also be used for financial and legal matters, but invalid if you should become incapacitated
- Medical power of attorney – also referred to as healthcare proxy; allows your agent to make medical decisions on your behalf if you are unable to
- General power of attorney – can be used for financial, business, real estate, and other legal matters, but can be limited by the terms specified in the POA; remains in effect until you revoke it, become incapacitated, or pass away
- Limited (special) power of attorney – allows your agent to act for a specific purpose and once it is completed, becomes expired
- Financial power of attorney – allows your agent to complete various financial tasks on your behalf, which can be either broad or specific in scope
- Springing power of attorney – only takes effect if/when a certain event occurs and ends at the time you specify in the document
You can think of your agent as the person who makes sure your life doesn’t fall apart in a worst case scenario!
Peace Of Mind
Everyone deserves to feel confident in their future, as well as their family’s, even if they won’t always be around to see it. No matter how “rich” or “poor” you think you are, everyone can take steps to protect their legacy and prepare for a rainy day.
At The Ladd Firm, we are most passionate about helping our clients get peace of mind, but we know that there might also be barriers preventing you from taking the first step – whether they be uncertainty, confusion, or lack of familiarity with the subject of estate planning. Our attorneys are committed to helping you make the right decisions for your family, and we take the time to help you figure out what they are. We will answer your questions, discuss your greatest concerns, and get to the bottom of what your ultimate goals are. Then, we can help craft the plan that most aligns with your objectives!
We offer an educational seminar to explain your choices, which is available live and as an on-demand webinar. After watching or attending the seminar, you are entitled to a free estate planning phone consultation with a lawyer! Call today to learn more.