In our last “What We’re UP To” from a few weeks ago, we mentioned that we’re updating our wills and health care directives. We didn’t expect anything out of the ordinary but surprisingly, there are a lot of moving parts in most estates than you might realize. So, we wanted to share some of our findings with you. To get us started with a conversation about estate planning, let’s start with a definition. Investopedia defines an estate as:
Everything comprising the net worth of an individual, including all land and real estate, possessions, financial securities, cash, and other assets that the individual owns or has a controlling interest in.
According to that definition, we all have an estate to some degree. That’s what an estate is, but there are basically three important documents that help spell out how you want your wishes carried out when you are no longer capable of doing so:
- A will
- Durable power of attorney for financial matters
- Health care power of attorney
As I mentioned, we’re in the process of updating these documents right now. Even though we’ve been through this process before, we’re realizing that things can change over time and wanted to share our takeaways.
Takeaway No. 1 – Your Estate Plan Should Not Be “Set It and Forget It”
Years ago, we did like most people and, with the help of an attorney, created a simple will that was signed and perfectly legal. Then, we immediately placed it in a safe deposit box for 15 – 20 years. The thing is, life has a habit of changing over time and you will want your will to keep up. I would still recommend a safe and secure place to store your official will. But, keep an electronic copy and schedule a regular review every 6 – 12 months and make changes as needed.
I mentioned that we created our original wills through an attorney, and we are doing that again now. Which leads us to takeaway number two.
Takeaway No. 2 – Doing Everything Yourself to Save Attorney Costs May Not Work Very Well
Yes, you can do that, and it may be just fine. Or, it may not. I’m not an attorney or a certified estate planner so the best advice I can give is this – know if and when to engage an attorney. That might depend on how involved your estate is or how complicated local and state laws are for your estate plan. Just don’t make assumptions that could result in costly headaches for your loved ones.
Speaking of assumptions, the worst assumption you can make brings us to the last takeaway.
Takeaway No. 3 – No, Everyone Does Not Have to Carry Out Your Final Wishes
We found out pretty quickly that you should have a Plan A, Plan B, and at least a Plan C when it comes to estate planning. It turns out that different states have different laws regarding things like taxes and executors. And if your will doesn’t follow the laws for your state, chances are the estate will be disposed by probate court. That could mean additional costly headaches for heirs and family.
Hopefully this article doesn’t seem full of doom and gloom. On the contrary, think of this as caring for those you love when you are no longer able to do so. Yes, it takes planning and dealing with a few decisions that could be a little uncomfortable. That helps avoid pitfalls and provide some peace of mind for everyone.
[…] We haven’t forgotten about this project. Keith recently wrote an article about our estate planning takeaways so far as we update our wills and health care directives. Let me add a 4th takeaway to his list: […]