Myth: An estate plan is just for high-net-worth individuals.
Fact: An estate plan is for everyone who is single, has a spouse, has a partner, has dependents, owns a business, has investments, has retirement funds, owns property, or has material possessions of value such as a car.
An estate plan may reduce estate taxes and shield your beneficiaries from having to go through probate. It means your last wishes will be heard loud and clear. You can name a guardian for any young children and can even direct how your four-legged children will be cared for after you are gone. Also, a very important reason for having an estate plan is that it can prevent a mess by bringing clarity to your beneficiaries, and it can protect assets from unforeseen creditors.
The estate plan may contain a will or living trust, the names of your beneficiaries, the appointment of an executor, a letter of intent that tells a beneficiary or executor what you wish to be done with specific assets, funeral details, and special requests. It should contain a healthcare directive with a power of attorney appointing a trusted person to make medical decisions for you when you can no longer voice your opinion, and a durable power of attorney appointing a trusted friend or relative to make financial and legal decisions for you, if you become incapacitated. It may also contain a trust or trusts for passing on assets to your beneficiaries.
You should update your estate plan whenever a major change occurs in your life, such as purchasing a home, moving in with a significant other, getting married, having or adopting a baby, selling your business, getting a divorce, retiring, or having a beneficiary die before you do. Review your plan when federal and state laws on estate taxes change. It’s a good idea to review every year or two, too.
If you should die without a will, which is called “intestate,” the state and federal governments will have standard procedures for distributing your assets, and they may not be in line with your wishes. Your beneficiaries may have to pay more in estate taxes, and probate may take considerably longer than it would if you had a will in place.
These are guidelines that apply to virtually everyone, but for LGBTQ+ people, there are some issues that are particularly important. For instance, your partner (or spouse) should be named in all estate documents, such as Power of Attorney, Advance Directives, Medical Power of Attorney and HIPAA authorization. This ensures that the person closest to you can make decisions if you cannot.
If you have young children, clearly delineating who gets the guardianship is essential as well. This is important both for identifying children…and grandchildren.
And then, there’s the will. This is particularly important for the LGBGTQ+ community. It is your opportunity to specifically—and legally—determine how your assets will be distributed.
As we’ve discussed before in these pages, many people aren’t comfortable thinking about estate planning because it conjures up thoughts of mortality. That, however, is inevitable, and in our experience people who take the time to do this work feel a sense of relief—and go back to enjoying their lives knowing that they’ve taken care of something so important for them and their families.
Consult a professional financial advisor on tax and estate planning. Trusts and wills can be complicated to set up, so consult a professional trusts and estates attorney or certified public account before you begin.
—Michelle Cutrali contributed to this article.
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