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Two big estate planning myths are that you only need an estate plan if you’re old, and you only need an estate plan if you care about your kids. You actually need an estate plan if you care about yourself. There are two other reasons you should have an estate plan even if you don’t have children.
If you can’t make important decisions, who will? Many people never seriously consider the possibility of declining capacity. Like me learning how to drive a stick shift, they think of the end of life as an “on” or “off” proposition, when the reality is that most adults will go through some period of incapacity.
An estate plan is more than just a will; it includes documents like a Durable Power of Attorney, and an Advance Health Care Directive. Together, these documents allow you to choose who can talk to your doctors and nurses, who can make vital medical decisions, and who can pay bills, and take care of your finances when you can’t.
An estate plan can also help protect your spouse. While joint ownership covers many assets, it doesn’t cover important assets like retirement plans, or assets just in your name. Having complete incapacity documents in place not only protects you, but ensures that your spouse can handle anything that would require your signature if you become incapacitated.
See “Do I Need an Estate Plan for My Spouse?“
Choosing Your Beneficiaries
“When it comes to what you’ll leave behind, there are only three buckets: Uncle Sam, charity or individuals,” says Jean-Luc Bourdon, a certified public accountant in Santa Barbara, California, and a member of American Institute of Certified Public Accountants’ personal financial planning executive committee.
With no plan in place, the state will give your estate to your closest living relative, and if they can’t determine who that is, your estate will go to the government. If you don’t have any deserving relatives or friends, or even pets, think about charities or causes you support. Trust me, they’ll be infinitely more grateful than Uncle Sam.
When you have a complete estate plan in place you’ll protect yourself, your spouse, and make sure that you choose your beneficiaries, not the government.