“What we have done for ourselves alone dies with us; what we have done for others and the world remains and is immortal.”
I define financial fitness as having the means to provide for yourself and others.
Estate planning is the process of determining how your assets (property) and health (personal care) will be managed if you become unable to care for yourself. It also includes deciding what will be done with your assets after your death.
If you have dependent children or parents, it can document your wishes for their care. The estate planning process may also help you decide if you should begin distributing assets during your lifetime. For me, it is the ultimate form of personal responsibility.
Many people are intimidated by estate planning. I was for many years, but have learned it’s not as complicated as I thought.
Should I Worry about Estate Planning?
If you don’t take the time to develop an estate plan, then the laws of your state, which may not align with your wishes, will become your plan by default.
For our estate plan, my wife and I determined who will care for our two minor children and how our financial assets will provide for their care until age twenty-one. Also, our trust and will contain specific instructions for their care should we become unable to care for them ourselves.
So YES, you should worry about estate planning IF you have dependent children. And if you are caring for an elderly parent or loved one, the same logic applies.
My wife and I determined how we want our assets divided upon our death. To determine your assets, think about all things listed in the asset section of a personal financial statement1 including bank accounts, real estate, stocks, bonds, furniture, cars, and jewelry. Your assets might also include life insurance proceeds, retirement accounts, and payments that are due to you (such as a tax refund, outstanding loans, or inheritance). Our trust, will, and life insurance policies contain instructions for the division of our assets when we are no longer here.
So YES, you should worry about estate planning IF you own assets and care how they will be divided upon your death.
My wife and I determined whom we want to make financial and medical decisions on our behalf if we lose the ability to make such decisions ourselves. Our will, general power of attorney (financial matters), and power of attorney for health care contain specific instructions regarding financial and medical decisions on our behalf.
So YES, you should worry about estate planning IF you want your financial and medical wishes obeyed in the event you become incapacitated.
My wife and I decided to protect our assets against extreme health care costs often associated with long-term illness. Long-term care insurance provides us with the financial assurance that our assets will be protected, and provides care-giving assistance to alleviate some of the burden on the healthy spouse for the duration of the illness.
So YES, you should worry about estate planning IF you want your assets protected from the financial drain of prolonged medical care.
Creating an estate plan is a technical process that typically requires an attorney. That’s what we did, but the most important parts of our estate plan were determined outside the lawyer’s office. Instead, it was when my wife and I spent time thinking carefully and discussing how we wanted to continue providing for our loved ones and ourselves when the time comes.
So NO, don’t worry about estate planning. Start your planning process NOW.
If you’d like a free copy of the “Planning Your Estate” guide that I use, please send your request to email@example.com.
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