I think it’s pretty safe to say that having children brings about a monumental change in the way we think about—and prepare for—the future. Though we don’t want to imagine our kids having to live without us, especially in their formative years, we also want to make sure that they would be well-looked-after and provided for if the worst happened.
The third week of October is National Estate Planning Awareness Week, so please consider this post a friendly reminder or timely invitation to make making plans a priority for your family. While none of us enjoys “What if?” conversations, making sure that you’re familiar with your parents’ wishes and plans as they age (and ensuring that they actually have them), establishing your own directives, and making decisions about the care and financial security of your kids may be difficult in the moment, but are crucial in the long term.
Many people don’t really consider estate planning until faced with sickness, a change in financial status, or even retirement. National Estate Planning Awareness week exists to remind everyone that waiting is definitely not the best course of action! If you haven’t really thought about estate planning yet, you aren’t alone. It’s estimated that 44% of Americans don’t have an estate plan in place and that those who have one haven’t updated it recently.
This post will answer some of the basic questions you might have about estate planning and give you some ideas about how and where to start, what it might cost, and why it’s important for your family’s future to make a plan.
What is Estate Planning?
Simply put, estate planning is the process by which a legal plan is put in place in case anything happens to you. It goes beyond simply having a will, which divides your assets in the event of your death, and enables you to make choices about the kind of medical care and intervention you’d like to receive, who can make decisions for you, and whom you’d like to take care of your children if you aren’t around. A full estate plan draws together a number of different legal documents and might include powers of attorney, advance healthcare directives, and trusts, as well as a will.
If you’ve ever lost a loved one, you know just how difficult it is to make important decisions when you’re in shock or grieving. An estate plan essentially provides written instructions for those you love, taking away the burden of decision-making at a stressful time. It enables you to designate someone (or more than one person) to handle your legacy, decide on your beneficiaries, and leave detailed instructions on how your assets will be divided. It also ensures that your wishes about your own health, care, and dignity are respected and honored by those who look after you.
Finally, from an entirely financial perspective, an estate plan helps to avoid or mitigate the lengthy and expensive probate process, can minimize taxes, and helps ensure that a property or business can transition seamlessly from one person’s ownership to the next.
Who is it for?
Estate planning isn’t exactly cool, nor is it really talked about on social media, in podcasts, or on TV. It has long been associated with older people and the hyper-rich, but the reality is, estate planning is important for anyone with people they love and want to protect. With a rise in the number of tragic accidents, traffic fatalities, and illnesses affecting younger adults, everyone over the age of 18 should think about putting a plan in place.
Being a little more realistic, it would be extremely difficult to sit down your 18-year-old college freshman and encourage them to think about estate planning. However, if you own a home, have your own business, and/or have kids, it’s time to seriously consider getting a plan in place if you don’t have one already.
By the same token, you can’t assume that you don’t need to make an estate plan because you perceive yourself as not having wealth or assets. In reality, absolutely everything you own forms your “estate.” Estate planning can therefore be as simple (or as difficult!) as deciding who will receive your most sentimental possessions—jewelry, books, china, or anything you really value—after your death. Or it can involve naming a beneficiary (usually your partner or child) if and when you decide to take out a life insurance policy.
Where Do I Start?
Like most things in life, estate planning starts with a simple and honest conversation. Those of us in our thirties and early forties are in an interesting and often stressful stage of life when estate planning becomes more of a priority than ever. As our parents age, we feel the pressure of ensuring that they have solid plans in place (and familiarizing ourselves with what they are), as well as protecting our kids by establishing our own.
Begin the process by talking to your partner and family about the different aspects of estate planning, and make some formative notes about the following:
- What are your assets? These will be tangible items, including your house, any land or real estate, vehicles, jewelry, coins, antiques, and art; as well as intangible ones like savings accounts, stocks and bonds, life insurance plans, 401(k) plans, and any business interests. You’ll need to be able to provide a valuation or statement for things like your home and accounts.
- Among the inventory of personal and sentimental belongings like jewelry, write down whom you would like them to go to. These items are often the things that seem to cause the most upset among grieving family members, so outlining your plans is crucial here. In Texas, a signed, entirely handwritten note expressing your wishes is sufficient for items such as these, which is great because you can update or add to it as you go.
- Whom would you want to be a legal guardian for your children if anything happened to you and your spouse? You’ll want to appoint a guardian and a back-up guardian, just in case, and you should let them know (and get their agreement). By the same token, you’ll want to document your wishes for the care of your children, especially if you can’t guarantee that their childrearing ideas and goals align with your own.
- Think about making advance directives—though be warned that these will probably be among the more difficult conversations you have with your partner or family members. You may want to create a trust that will use parts of your estate to pay for things (like care or medical costs) while you’re alive. Beyond a trust, a medical care directive (or living will) spells out your wishes in case you become incapacitated or otherwise unable to make decisions for yourself. While you might find it easy to say that you don’t want to be kept alive by any means necessary, try to be mindful of the fact that these decisions would be really hard for those you love in the moment. Be tactful and respectful, and if possible make the decision together. (This is especially vital for couples, but my husband and I found ourselves to be very well-aligned here before we even discussed it.) You may also decide to appoint someone as your medical power of attorney and allow them to make decisions on your behalf. With the growing prevalence of dementia and Alzheimer’s disease, I think it’s more important than ever to make decisions about the kind of treatment (especially life-prolonging, rather than life-saving) we’d like to receive, how we perceive “quality of life,” and how that might impact our family members. Lastly, you can opt for a financial or limited power of attorney to help manage your assets if you are incapacitated. You should carefully consider whom you’d like to list in any and all of these roles.
- Read up on the state tax laws. You don’t need to have extensive knowledge, but you do need to know a little about the lay of the land and the kind of taxes your estate would be subject to. You’ll also want to consider whether professional estate planning help is needed and in your budget.
While I am absolutely a believer that the Internet can teach you pretty much everything, I also know my limit. While there are plenty of DIY “write your own will” services online, it’s highly unlikely that a fill-in-the-blank will or trust will achieve a truly comprehensive estate plan. While having something in place is often better than nothing, any service offering a canned, one-size-fits-all option won’t provide you with legal advice unique to your situation or look over the finished product to make sure it’s accurate.
My husband and I recently updated our estate plans, a process that—like drawing them up in the first place—our lawyer made simple and easy. If you take the time to make some basic lists of your assets, gather your relevant documentation (such as property valuation, life insurance policies, savings statements, prenuptial or divorce agreement, etc.), and think about your advance directives, an estate planning attorney can painlessly manage the rest. You can even consult with them via an online meeting, or a combination of phone calls and email, rather than in person if that works best for you.
Costs are variable depending on the complexity of your situation and whether you’re planning as an individual or a couple. In San Antonio, there are many firms offering estate planning at various price points. Another member of the ACM team recently did all her estate planning with a very reasonable attorney for around $500 per person. A simple will might cost as little as $250–300, but a solid estate plan will involve several billable hours for your attorney and could easily cost $1,500+ for a couple. While this is a considerable expenditure, it’s worth remembering that: 1) the probate costs of dying without an estate plan are much higher than this, and 2) this is pretty much a one-off, large outlay, and any future additions or changes will probably cost much less.
Estate Plan Already in Place?
If you have an estate plan in place, first, thanks for making it this far down the page! And secondly, great job! Please remember to keep it updated. As your circumstances change— moving houses, acquiring new assets, growing your family, divorce or marriage, medical diagnoses for you or a family member—your estate plan should, too. Typically, estate plans only fail because they aren’t updated, and then they become ineffective or outdated.
Finally, as well as making sure your doctor has a copy of your advance medical directive, keep a PDF copy of it, any power of attorney, and your will on your phone. You don’t have to look at it, but in an emergency, having it there (and letting your family know it’s easily accessible) is just another way of removing the burden of stress from those you love.
While estate planning might not be particularly exciting—and maybe even a little depressing—it’s a huge relief to actually be able to cross it off the list. So whatever else is keeping you awake at night, Mom, worrying about what would happen to your kids if you weren’t around needn’t be one of them.