Estate Planning is a big word, and most folks do not know what it really means. At its core, it means putting formal measures in place to manage your personal and business life now and after you die. Every person over the age of 18 years has an immediate need for estate planning because that is when we transition from child to adult.
At age 18, each person should obtain two kinds of power of attorney documents: a Healthcare Power of Attorney and a General Durable Power of Attorney. The documents ensure that if you become very ill or injured, someone already has the authority to act on your behalf. The alternative, if they are not in place but needed, is very expensive and involves the courts.
Unfortunately, for those children with significant disabilities, the only avenue for a parent to continue in the role of a parent is to obtain a guardianship and conservatorship. Parents of these children should be thinking about establishing a Special Needs Trust and funding it with life insurance to ensure there are resources in place to care for the child after the parent is no longer able to do that.
A Last Will and Testament with instructions for who will care for your minor child and any money your minor child might inherit because of your death is needed as soon as you have a child, whether you are married or not. Simply being married and having no children does not generally create a need for this type of planning, yet.
When your children become adults, your goal should be to avoid probate. There is a very concerning privacy issue connected with probate. That is the main reason to avoid it. We most commonly do this with the soft-serve vanilla ice cream cone trust called a revocable living trust.
Once you get a bit grey on top (60ish) you should start thinking about your legacy for the next generation. A dip-cone trust (irrevocable trust) is needed to protect your ice cream from creditors. This is a highly specialized trust used when we are protecting a family farm, family business, or other cash asset that we do not want to be eventually used up paying for long term care.
We will explore each of these estate planning topics in greater detail in upcoming articles. However, it is graduation season right now. Powers of Attorney make a perfect graduation present for your newly minted adult.
