5 Questions Seniors Frequently Ask About Estate Planning

Estate planning seems to be a topic that seniors talk about, but surveys show that only 58% of members of the baby-boomer generation have gotten around to actually doing it. In fact, only around 40% of the adult population has a will. An estate plan not only gives you peace of mind knowing that the assets you worked hard all your life to acquire will be protected and passed on according to your wishes after you are gone, but it also allows you to put someone you trust in charge of making financial and health care decisions when you can longer make them on your own.

Just as you prepare for emergencies, estate planning needs to be done before you need it. In order to get you started, here are answers to five of the most common questions seniors have about estate planning.

Question 1: What is estate planning?

Ensuring that your wishes regarding the management, preservation and distribution of your assets after death are carried out is only one aspect of estate planning. An estate plan should also consider how financial matters will be handled and decisions made about your medical care when you are unable to make them for yourself in the event you become incapacitated due to illness or injury.

An estate plan gives you peace of mind knowing that someone you trust will be in charge of carrying out your wishes about your estate, after your death, to provide for your loved ones. It also allows you to maintain control over your finances, medical care and end-of-life decisions by putting a trusted friend or family member in charge to handle them if you are unable to do so.

Question 2: I'm not rich, so do I really need an estate plan?

You do not have to be wealthy to benefit from an estate plan. Estate planning allows you to be in control and know that your wishes will be carried out either after death or in the event you become incapacitated regardless of what you own or how much money you have in the bank.

Question 3: What should be included in an estate plan?

People and their circumstances differ, so a consultation with an estate planning attorney will give you options about what to include in your plan to meet your specific needs and goals. Some common estate planning documents include:

Last will and testament: A will allows you to designate a person you trust to serve as the executor in charge of managing and protecting your estate, paying debts and taxes, and distribution of remaining assets according to your written instructions.
Trust: Unlike a will that does not go into effect until you die, assets you own may be transferred into a trust to be managed and invested during your lifetime and then distributed according to your stated wishes upon your death. One advantage a trust has over a will is that it does not have to go through a probate process, which is a court proceeding, to pass assets on to your loved ones after your death.
Durable power of attorney: A power of attorney is a document that allows you to appoint someone you trust as your agent to handle financial matters on your behalf. For example, your agent could handle the sale of property you own in another state in your absence using the power of attorney. Your agent cannot use a power of attorney if you die or become mentally incapacitated. Durable powers of attorney remain in full force even in the event of mental incompetency.
Power of attorney for health care: Some states refer to them as powers of attorney for health or medical care while others call them health care proxies, but whatever they are called, they give you the ability to appoint an agent to make decisions regarding the medical care you receive when you cannot make those decisions on your own.

Question 4: Can I change my mind after I complete my estate plan?

As a general rule, documents created for your estate plan may be changed to accommodate events that occur in life. For example, you can amend a will through a document known as a codicil to include a new grandchild as one of the beneficiaries participating in the distribution of your estate.

Question 5: What happens if I do not have an estate plan?

If you do not have a will or a trust in place when you die, the assets comprising your estate will be distributed according to state law. Instead of your wishes being followed, dying without a will means your estate is distributed to relatives according to the state's intestacy laws.

The absence of a durable power of attorney and a power of attorney for health care removes control from you over financial and medical decisions. Your loved ones may be forced to go to court to have someone appointed to handle financial and medical decisions if you cannot do so on your own.

Get more information from your attorney

Estate plans come in all shapes and sizes to accommodate your specific needs. Speaking with an experienced estate planning attorney will provide you with answers to your questions and options for giving you peace of mind about the future.