By Darlynn Morgan, Orange County Estates Lawyer
While many people focus on getting out of debt or getting organized for the New Year, estate planning is an equally important personal finance goal that should make every adult’s to-do list.
That’s simply because resolving to get your legal affairs in order is one of the most important things you can do to make sure your family, wishes and assets are protected if something unexpectedly happens to you this year.
As an Orange County estates lawyer, I know that far too many area residents are without plans to protect the people or things they love the most should the unthinkable occur. In fact, a recent lawyers.com survey reveals that only 35% of adults have a basic will or other estate planning documents in place should death or incapacity suddenly strike without warning.
Yet it’s important to remember that without such documents in place, a judge could be forced to make painful custody decisions on your child’s behalf, heirs you may not even like could inherit your estate and under the new privacy laws, no one would have explicit permission to make important medical or financial decisions for you if you were incapacitated in an accident.
That is why at a bare minimum, every adult needs a basic will or trust (depending on the amount of assets you own and potential tax complications), power of attorney forms and health care directives in place to avoid a legal and financial nightmare if something unexpectedly happens.
If you’re not sure what exactly these documents do for you and why you need them in the first place, I’d like to offer a brief crash course.
For starters, a will is a document that specifies what should happen to your assets if you pass away. This helps to ensures that your assets are distributed to the people you want, in a way you want, if something happens. A will is also instrumental in naming guardians who can care for your minor children on a short or long term basis.
A trust on the other hand is a legal entity that can hold title to property. With your assets securely placed in a trust, you can minimize your financial exposure to lawsuits, divorce and bankruptcy while alive. Upon death, a trust will keep your affairs private and out of the probate court. It also allows a great deal of control for people who do not want their inheritance going outright to their heirs at a young or impressionable age.
A power of attorney form gives explicit permission for someone to access your personal accounts, pay your bills and handle all other financial and legal affairs if you are incapacitated in an accident but do not die. Under the current privacy laws, even a spouse may have a hard time accessing personal information without such documentation in place.
Finally, an advanced health care directive, also known as a living will, specifies your healthcare wishes if you are incapacitated in an accident and unable to speak for yourself. Such wishes may range from whether you want certain medications administered to when (if at all) to start life support in critical situations. This document also allows you to appoint the person best suited to carry out such wishes should incapacity occur.
Remember, accidents and serious illnesses happen every day without warning. That is why it’s so important for any adult who has not tackled their estate planning to add it to their list of New Year’s resolutions this year. It will ultimately save your family from years of headaches and thousands of dollars in unexpected costs should tragedy strike.