Raise your hand if you think you are rich.
Why aren’t there any hands raised?
Time to check your definition of rich!
As Americans, we’ve been brainwashed into believing that if we aren’t living like Donald Trump in a mega-mansion, jetting off to glamorous vacation destinations, or hobnobbing with celebrities, then we simply aren’t rich.
This vision has lead to a society that scoffs at the “E” word: estate. What we have is a general population that can’t imagine why they would need to spend time and money securing possessions that Donald Trump might have owned when he was just out of high school.
If you have investment accounts or own a house, jewelry, art, collectables, boat – or anything in this realm – then you have an estate.
When it comes to estate planning, remember The Magnificent Three:
1. A Living Trust:
A living trust is a revocable trust that is set up during your lifetime. You name a trustee that oversees the trust on your behalf and is responsible for distributing the trust assets should something happen to you.
A trust is a valuable estate-planning document because it helps your estate avoid probate. Probate should be one of the dirtiest words in your vocabulary because it creates a mess for your surviving family members. Probate is expensive and time-consuming for anyone involved, and families often lose up to 5% of the estate due to court and attorney fees.
Setting up a trust is an expense, since you’ll want an attorney who is familiar with the terms that need to be included in the document to create the living trust for you.
There is no “one size fits all” when it comes to living trusts. What assets you choose to include are up to you; however, each asset must be titled in the trust. This is the most commonly overlooked piece of the living trust, and one that often invalidates the trust if not handled properly.
While many people hire an attorney to create their will, it is not unusual to see a handwritten or typed will created by an individual. As long as you are over 18 years old and of sound mind, you can write your own will – just remember to sign (or “execute”) it.
A will simply becomes your voice when you pass away, “speaking” on your behalf to your beneficiaries. Just about anything can be addressed and named in your will, including what to do with your pets, to whom you would like money donated, or even who gets your run-down lawnmower. Surely someone wants it!
3. Advanced Healthcare Directive:
While a will acts as your voice in regard to your possessions, the Advanced Healthcare Directive is your voice when it comes to your healthcare wishes. The Healthcare Directive is a written statement that you make to inform all parties of your wishes should you become incapacitated. Some states have specific clauses that need to be included in the document, so make be sure to check with your state’s regulations.
As an example of why this is so important, does the name “Terri Schiavo” mean anything to you? Terri didn’t have an Advanced Healthcare Directive, so her medical decisions were left in the hands of her family and doctors. Her battle was long and hard and lead to many legal discussions over the “right to die.” Once you’ve completed your Healthcare Directive, make sure that your primary doctor, as well as any family members who would be responsible for your care, have a copy.
While we may not consider ourselves to be “rich,” nearly every one of us has an estate. Sure, the size and volume of your estate might not as big or as small as your neighbors, but nevertheless it requires your attention. Take a month, call it your “time for my estate before it’s too late” month, and knock out these important documents. Then you can call up Donald Trump and tell him you’re coming over now that you are an official member of the “Estate” club.