The Truth About Estate Planning

An usual definition of estate planning is “arranging for the disposition of your assets after death.” That definition completely misses the mark. Estate planning is about much much more than just deciding who gets what, when, how, and how much.

Estate planning has 2 components. The first protects you, your family, and your money during your lifetime. The second is about deciding the disposition of your assets. Not many people talk about the first component, which in my opinion is more important than the second.

Lifetime Protection

You are an adult. As an adult only you can make your own personal, healthcare, legal, and financial decisions. Even your spouse is not allowed to make them for you. Unless you give others legal permission to make decisions for you.

Without giving others legal permission to make your decisions, only a Judge can give somebody else that power!

That process is called a “guardianship.” In it, a Judge will decide if you are mentally competent. If the Judge decides you are not, then the Judge chooses who will make your decisions. And they are under the Judge’s supervision. Annual reports are required as to how the money was managed.

The guardianship proceeding takes precious time away from your family and spends money needlessly. And maybe worst, it is all public information.

However, you can create a durable power of attorney and prevent all that. You get to decide who is in charge if you are incapacitated.

But how does that protect you, your family, and your money?

A power of attorney keeps you and your family out of court. Things are managed privately. You stay in control of who is in control. If your spouse needs to sell the house, they can sign for you. Otherwise, a Judge has to approve the sale. If you need Medicaid, then your spouse can help and sign. You also prevent family fights over who is in charge. These are just a few examples of how you get lifetime protection from estate planning.

Distribution of Assets

This is the part of estate planning that people usually think of. It is the realm of Wills, Trusts, and some other tools.

This part of an estate plan provides for an orderly transition of property to your spouse and children. By making your wishes known, family fights are avoided.

If you don’t plan, then your family faces Probate. Probate is the court supervised process of distributing what you had. It is required because you can’t sign to give it away. So a Judge has to sign for you. And, probate is a public process. Your and your family’s personal information is published.

With an effective estate plan, your family avoids Probate and keeps their privacy.

Conclusion

The truth about estate planning is that it protects you, your family, and your money during your lifetime. Then it provides for an orderly transition to your spouse and children.