If you look at the images used in estate planning advertising, it portrays the ideal goal. You pass away in peace in your 80s or 90s and pass on the wealth you have created to your grown-up children. Yet when it comes to creating an estate plan, you cannot bank on this. You also need to prepare for the kind of scenarios no one wants to think about, let alone use images of in advertising.
For example, you are bedbound in hospital for months after being struck by an unexpected illness in your 60s. Or you in a retirement home surrounded by your grandchildren whose names you cannot remember and whose visit you will forget within a few minutes. Or even worse, your family is trying to explain to your two small children that mommy and daddy are never coming home as a truck hit their car last night.
What backup plans should I put in place?
A long-term illness can rip through your savings in no time at all. Understanding how to structure your estate so that you can benefit from Medicaid instead of spending the kids’ inheritance is crucial.
Powers of attorney are another must. You need two sorts, one to make health care decisions for you and one to manage the finances and sign legal documents on your behalf. Conditions such as Alzheimer’s affect many people, and if you cannot remember your grandkids’ names, it is unlikely you will have the capacity to sign legal documents or make financial transactions.
As for the most distressing situation of all, dying before your kids grow up, putting a guardian in place is crucial. Otherwise, it will be left to a court to decide who raises your kids when you are no longer around. Hopefully, your life will turn out like those peaceful, joyful images, yet your estate plan needs to consider it might not.