Can I Protect My Family after Death?

Can I Protect My Family after Death
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The future is uncertain. However, you can ensure that your family and loved ones are taken care of with estate planning. Estate planning is a critical component of financial planning for the future.

Estate planning involves a close look at personal and financial goals while you are living and after you have died, as explained in a recent article titled “Professional Advice: Secure your future with estate planning” from Northwest Indiana Business Magazine. Having a comprehensive estate plan ensures that your wishes will be carried out and your loved ones protected.

Your last will and testament identify the people who should receive an inheritance—beneficiaries—who will manage your estate—executor—and who will take care of your minor children—guardian. Without a valid will, the state will rely on its laws to distribute assets and assign a guardian to minor children. The state laws may not follow your wishes. However, there won’t be anything your family can do if you didn’t prepare a will.

Assets with beneficiary designations can be passed to heirs without going through probate. Certain assets, like life insurance policies and retirement accounts, allow a primary and secondary beneficiary to be named. These assets can be transferred to the intended beneficiaries swiftly and efficiently.

Many people use trusts to pass assets for a variety of reasons. For example, a trust can be created for a family member with special needs, protecting their eligibility to receive government benefits. Depending on the type of trust you make, you might be able to eliminate estate taxes. Certain trusts are also helpful in protecting assets from creditors and lawsuits and ensuring that assets are distributed according to your wishes.

Revocable living trusts provide protection in case of incapacity, avoid probate and ancillary probate, and may provide asset protection for beneficiaries. If you are the creator of a trust—grantor—you will need to appoint a successor trustee to manage the trust if you are the original trustee and become incapacitated. Upon death, a revocable trust usually becomes irrevocable. Assets placed in the trust avoid probate, the court proceeding used to settle an estate, which can be both time-consuming and costly.

A Power of Attorney allows you to name a person who will handle your financial affairs and protect assets in the event of incapacity. That person—your agent—may pay bills, sell assets and work with an elder law estate planning attorney on Medicaid planning. The POA should be customized to your situation. You may give the agent broad or narrow powers.

Everyone should also have a Health Care Proxy, which gives the person named the legal right to make health care decisions on your behalf if you cannot. You’ll also want to have a HIPAA Release Form (Health Insurance Portability and Accountability Act), so your agent can speak with all healthcare providers, access medical records, and speak with the health insurance company on your behalf.

A Living Will is the document used to convey your wishes regarding end-of-life care if you cannot do so yourself. It is certainly not pleasant to contemplate. However, it should be considered kindness to your loved ones. They may be forced to decide without knowing your wishes and will never know if it was what you wanted. A Living Will also avoids conflicts between health care providers and family members and makes it less stressful.

A comprehensive estate plan protects the individual and their family members. It avoids costly and stressful problems arising from the complex events accompanying illness and death. Every three to five years (or when life or financial circumstances warrant), meet with an estate planning attorney to keep your estate plan on track.

Reference: Northwest Indiana Business Magazine (Dec. 27, 2022) “Professional Advice: Secure your future with estate planning.”