June 2022 (Chicago, IL)
If you’re like many Americans, you might find estate planning to be an uncomfortable or even stressful topic to address. Indeed, a 2022 survey from Caring.com revealed that although the majority of Americans understand the importance of having an estate plan, a staggering 68% do not currently have one.
The survey reports various explanations for why this discrepancy exists. Regardless of the reasons why people consistently deprioritize the task of creating an estate plan, it’s difficult to understate the importance of doing so. Not accounting for what will happen to you and your assets if the unexpected occurs can open you and your loved ones to substantial risk and unwanted consequences. The absence of an estate plan can result in a total loss of control over your own affairs in the event of an unplanned life-altering event, such as a car accident or health crisis. Such events can also create unwanted confusion and tension for your loved ones.
Without an estate plan in place, the statutes of the state where you reside will dictate some of life’s most important decisions for you. Organizing an estate plan right now – while you’re of sound mind and body – ensures that you are in control of your future.
While there are many issues to consider with a comprehensive estate plan, here are four tasks that you should move to the top of your priority list.
Document Your Health Care Wishes with a Living Will
A living will is an advance directive that indicates the specific types of medical care that you wish to receive if you are no longer able to make such decisions (due to a terminal illness or being permanently unconscious). This includes your preferences with regards to resuscitation procedures, ventilators, tube feeding or other life-sustaining medical procedures.
Designate a Medical Power of Attorney
An unexpected illness or injury can render you incapacitated and unable to make critical decisions about your own well-being. In these circumstances, you must grant someone else the legal authority to make those decisions on your behalf.
A medical power of attorney, also known as a health care proxy, is a legal document that authorizes one or more people to make important medical decisions on your behalf should you become physically or mentally incapacitated. Most people assign their spouse or partner as their primary health care agent and one of their children or a close family member or friend as an alternate agent should their primary agent also become incapacitated or pass away.
Create Medical Orders for Life Sustaining Treatment (MOLST)
Also known as a Physician’s Orders for Life-Sustaining Treatment (POLST), this outlines a plan of end-of-life care that reflects both your preferences and your physician’s judgment based on your medical evaluation. This form can be created even if you’re not ill: it only goes into effect if you’re facing an end-of-life situation.
It’s important that your loved ones are aware of your medical treatment preferences and health care wishes before an unexpected crisis takes these decisions out of your hands.
Choose An Executor
An executor is an individual of your choosing who will become responsible for managing the distribution of assets in your estate if you are unable to do so due to illness or death. These assets include your home, investments, vehicles and other valuable items.
An executor does not need to be a legal professional. In fact, anyone can serve as executor, including a family member, your children or a close friend. Regardless of who you choose for this role, make sure they are aware of your decision and that they understand their responsibilities.
Protect Your Financial Interests
Part of protecting your financial interests involves designating a financial power of attorney to give control of your finances to someone else, should you no longer be able to manage them yourself. Like a health care proxy, a spouse or partner is often assigned to this role.
Assign a Financial Power of Attorney
A durable financial power of attorney grants a designated individual the ability to manage your financial affairs if you’re medically unable to do so. As directed in your document, this designated agent can act on your behalf in legal and financial situations if you should become incapacitated.
This decision involves determining who will pay your bills and taxes on your behalf, when and how the power of attorney takes effect, and whether your designee is granted access to your finances and assets immediately or only after a specific event (such as a hospitalization).
Although you can elect anyone to serve in this role, this individual should preferably have a strong understanding of personal finance and investing. If a health care crisis requires them to intercede on your behalf, they will need to make critical decisions that could involve significant adjustments of your investment strategy and withdrawals from your bank accounts to fund any medical and long-term care expenses.
Finalize Your Will
Ideally, you’ve created a will that specifies how your assets will be distributed. You should strongly consider discussing this information with your heirs, especially if they’re under the mistaken assumption that they’ll be inheriting the bulk of your estate. In the event that this isn’t true — for example, if you wish to leave most of your assets to charity —it’s generally better to inform your heirs of this decision sooner rather than later.
Once you’ve made decisions about these critical issues, it’s important to communicate them ahead of time to those who will be impacted: make it easy for people to access the information that they will need in order to carry out your wishes. Ideally, the individuals named in your estate plans should have access to the following documents:
- Copies of your health care and financial proxy forms
- Copies of your life insurance policies
- Contact information for your primary care physician, attorney, accountant, financial adviser, life insurance agent or any other professionals they may need to contact in a health care emergency or after your death
- Any interment agreements you’ve made with a funeral home or cemetery
Thinking through end-of-life issues can cause some anxiety. But creating an estate plan may ultimately be one of the most rewarding tasks that you undertake. Making these decisions now – while you’re still physically and mentally healthy – provides a profound and powerful sense of accomplishment. Planning ahead allows you to be confident in knowing that some of life’s most important decisions will be handled on your terms when the time comes.
For the average American, the most challenging part of estate planning can be knowing where to start. Most of us know we should have some sort of plan in place to protect our assets and ensure our loved ones are cared for when we are gone, but the steps necessary to make that happen can be confusing.
If you’ve been meaning to create an estate plan but don’t know where to begin, let us help.
For a confidential consultation about your estate plan, call us at 312-655-7660 or fill out our online form at https://danherbertlaw.com/contact/
To learn more about our estate planning services, visit our website at https://danherbertlaw.com/practices/personal-injury/