Estate Planning…It’s Not Just For the Dead

Mention estate planning to people and you get all sorts of reactions. A couple of my favorites are “why should I care, I’ll be dead”, and “estate planning is just for rich people”. Given that a majority of the people living in the U.S. are, in fact, alive, and not necessarily “rich” (use your own definition of this), does that mean that we should discount estate planning for just a select few, in the upper echelons of income and net worth? Absolutely not!

Discussing one’s own mortality is a difficult subject for most people, but the truth is, “estate” planning has evolved into something that not only deals with dispositions of assets (and other matters) after death, it also includes matters that arise during lifetime, such as disability and incapacity.

Consider these scenarios:

1-A couple owns a home jointly, with a right of survivorship upon the death of the first spouse. What happens if one spouse becomes disabled or incapacitated (physically or mentally); how can the house be sold (or the mortgage refinanced) if both spouses signatures are needed on various documents? Similarly, what if a single person owns a home, and then becomes disabled or incapacitated; what happens to the house?

2-What happens when a person is clinging to life after a stroke, and life or death medical decisions need to be made immediately? Who gets to decide whether to ’pull the plug’ or not?

3-Mom and dad die simultaneously in a tragic car accident. Who will care for their two children, and decide about their upbringing and education?

What people don’t realize is that if matters are left to the laws of the state where one resides, the results may not be what was expected, or hoped for, and could ultimately cost a lot more money than what the cost would be to put together a comprehensive estate plan. I’m a CPA and not an attorney, but from all the years that I’ve been working on cases with estate attorneys, I’ve seen what happens when decisions are left to the state of residence, and you don’t want that to happen.

You’ve probably heard terms such as “durable power of attorney”, “living trust”, “healthcare proxy”, and “nominating a guardian”. These are some of the tools that are used in putting together an estate plan, to deal with the scenarios mentioned above. A competent estate planning attorney will be able to discuss these things (and more) as part of putting together a plan. It’s one of the best investments you can make, and something that one should not keep putting off. Make sure your wishes are carried out the way that you planned. Whoever you work with, check their credentials and qualifications, since estate planning is a very technical and tax driven area. Be very wary about somebody who has only been practicing estate planning for a couple of years, or who “specializes” in many different areas of law. If your gut tells you that the attorney doesn’t have enough experience, he/she probably doesn’t. I’ve seen the consequences of inexperience. If you don’t know any estate planning attorneys, I can make a referral (at least for the Northern Virginia metro area and New York City).

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