It's a popular misconception for people to think writing a will is the same as having an estate plan. In practically every situation, a will does not amount to a complete estate plan. Often, people don't know how a comprehensive estate plan could be helpful to them and their families. Here are frequently overlooked estate planning tools and the potential benefits they could have for you and your family.
Preparing for the Unexpected
No one plans to become incapacitated. Yet, an accident, injury, or illness can render anyone unable to manage their affairs. When these challenges arise, emotions tend to run high. A once close-knit family can become divided over who should be in charge and what decisions to make. It doesn't have to be that way. Creating the right documents in advance can make your wishes clear.
As a California resident, you can use a durable power of attorney for finances to name someone as your "agent" to handle your finances while you're unable to. With another document, the durable power of attorney for health, you can select an agent to make your healthcare decisions. If you desire, you and your estate planning attorney also can prepare a document called a living will to explain your preferences related to medical decisions.
Establishing a Secure Future
Depending on your circumstances, your estate plan may need to establish a secure future for yourself or a loved one. The U.S. Department of Health and Human Services estimates 70 percent of people who reach age 65 will need long-term care before they die. That statistic illustrates the wisdom of making long-term care insurance part of your estate plan.
Do you have a special needs son or daughter who depends on your care? Special needs planning can become part of your estate plan. For example, you may want to set up a special needs trust. It allows you to provide for your loved one without jeopardizing their public benefits.
Keeping the Family Business Intact
Everyone who owns a family business needs a business succession plan in their estate plan. Business owners tend to think they have plenty of time to determine what will happen to their family business when they're ready to retire. Unfortunately, there have been cases of owners whose sudden disability forced early retirement. Since the right tools weren't in place, their unplanned departure caused significant disruption. In most of those cases, the business didn't survive the crisis.
Sadly, there's another way neglecting succession planning can result in the loss of the family business. An untimely death could require the family to sell the business to cover estate taxes.
Your family's experience can be different. Business succession planning is the means to avoid those negative outcomes. A business succession plan should include two essential documents. One is the buy-sell agreement, which names who will buy the business and how much the buyer will pay for the asset. To be effective, the buy-sell agreement has to be funded to ensure capital is available at the time of need. Typically, a life insurance policy funds these agreements.
Also, it's wise to put a family business within a revocable living trust to keep the property out of probate. The probate process is time-consuming, public, and costly. Keeping business matters private, transferring ownership quickly, and avoiding probate expenses are advantages of placing a family business in a revocable living trust.
A complete estate plan does far more than explain how to distribute assets after death. Preparing for your future and that of your loved ones is the goal of comprehensive estate planning. Contact us to craft a complete estate plan that's right for you and your family.