October 17 to 23 marks the observance of National Estate Planning Awareness Week. The purpose is to assist the public in Texas and nationwide in understanding and appreciating the importance of estate planning to one’s overall financial plan. Polls show that almost half of the public believes that estate planning is only for a small class of very wealthy people.
That is not the case. Everyone with assets will benefit by an estate plan. On a very basic level, a person can cause complications for him or herself and any heirs by not planning ahead. The failure to plan can result in significant extra expenses and fees that could have been avoided.
One important legal instrument is a durable power of attorney. It provides for a trusted family member or friend to administer one’s financial and legal affairs while disabled or legally incompetent. The appointee may do banking, purchase food and necessities, file taxes and generally take care of one’s personal and economic needs. Without it, one’s next of kin may have to go into court and have a guardian appointed to perform these functions. That can be expensive and may unnecessarily consume resources normally available for the person’s care or for his or her beneficiaries.
The foundation of an estate plan is usually the last will and testament. This is a legally enforceable document that specifies the details regarding who will run the estate and who will inherit assets. The will is a guiding force that appoints a personal representative, also called an executor, and directs him or her to pay bills and expenses, gather the assets and distribute them to the listed beneficiaries.
Without a will, a person qualified and designated by law under Texas statutes will have to be appointed as an administrator of the intestate (without a will) person’s estate. In that event, the state’s statutes and not the person’s inner wishes, will specify the division of property. There are other important estate planning documents that are always explained and generally prepared after an initial meeting with one’s estate planning attorney.
Source: Forbes, “5 Documents You Need To Avoid Costly Estate Planning Errors“, Peter Lazaroff, Oct. 16, 2016