By Joseph P. Buttiglieri
We have all been inundated with news of our country’s financial crisis, the health care cost and availability crises, the fluctuating cost of gas, infrastructure challenges and myriad other issues that seem to have impacted us suddenly and simultaneously. The truth is that none of these problems arrived without warning.
In general our political leaders have failed to act and plan for the future, even though there were warning signs. The same can be said for our personal and business lives when we ignore or avoid dealing with the inevitable. We delay in making an appointment to see the dentist or doctor and the next thing we know there is a serious (but preventable) dental or health issue. If we neglect our health, how much more likely are we to neglect our legal needs until they become a crisis?
Because our finances touch upon every aspect of our lives, we are perhaps now asking ourselves whether we’ve adequately planned for a crisis. For many of us, the answer is no.
Indeed a legal “checkup” is something most of us never complete. But it doesn’t have to be that way. Speaking with a lawyer or advisor about earmarking money for your family’s future could be the most important thing you do right now. In fact, many families lose thousands of dollars when a loved one dies.
A basic estate plan can prevent this kind of loss for the average American. And the cost is manageable for households in virtually any income bracket.
Many people think estate planning is for the wealthy. Yet it is a necessity for anyone wanting to protect a family, a home or life savings. We should ALL have in writing such details as who should care for and have custody of our children if something unfortunate happens to us, who should make our medical decisions if we become physically or mentally incapable, and who gets control of and/or ownership of our monetary assets, realty and possessions if we pass away.
Simply having an estate plan or trust isn’t enough. It needs to be revisited and updated as situations dictate. Consider that job changes and financial losses could be affecting the people you would have named as guardians to your children. So if you left your children with a sibling who has recently had a costly divorce or has lost a job, you may want to consider alternatives in your estate plan.
An estate plan that is not properly drafted and tailored to your situation could be useless. Before you begin to create or change your estate plan, here are some questions you should be prepared to ask your lawyer:
- What is his or her specialty?
- Can he or she predict an approximate cost for what might be needed?
- How will the suggested documents or changes effect or avoid possible taxes?
- How will the suggested documents or changes help now and will there be flexibility for my heirs?
Preparing or updating an estate plan is just as important as giving your financial affairs a makeover. And many good estate planners will be happy to have an initial consultation and not charge you for it unless you decide to use their services.
At a minimum, you should be re-examining your estate plan status at least every five years. And if you have a change in your life, you should do so before or shortly after that event. A marriage (or divorce), birth of a child or grandchild, death of a close relative, loss of or change of employment – these are all occurrences that should raise a flag. These changes present opportunities to open up discussions and take action that is helpful and will hopefully lead to peace of mind.
On a more personal level, I think it is a good idea to examine your personal financial and legal situation at least yearly. My wife and I sit down once a year (usually close to New Year’s Day) to review our financial situation, planned or desired major expenditures and discuss if we have the needed documents in place should the unexpected happen.
All too often, we hear the story of the bereaved widow or widower with little or no knowledge of family finances or of how legal affairs will be handled. It shouldn’t be that way. This family discussion need not be morbid or uncomfortable. It can include information about who to call if something happens but also where to vacation, and how much you can afford to spend. Planning is not all about the scary things in life, but should include the fun things like adding that hot tub and vacationing in Tuscany. As our children get older, it can also be a good idea to include them in these discussions as appropriate.
Legal Check-up
There are many areas of our lives in which a legal “checkup” can eliminate and avoid problems in the future. Seeing an attorney should not only occur when there is a crisis. Examples of matters that can be dealt with to avoid problems and perhaps keep you or your loved ones out of court include:
- A power of attorney for medical and financial decisions;
- A pre-nuptial agreement;
- A will and/or trust;
- Business agreements that provide for sale to a partner or for succession;
- Tax planning that will save taxes or problems with the IRS;
- Real estate and property;
- Employer and/or employee issues; and
- Guardianship and Conservatorship nominations for minors or incapacitated relatives.
When it comes to our country’s economic crisis, the writing has been on the wall for quite some time. Similarly, when a life crisis hits, many people tell me they knew they had a potential problem or had a gut feeling long before anything ever happened. Let’s not take our cues from the federal government. Plan ahead to ensure that a personal crisis does not wipe out your family’s future.
For more information regarding these matters, please contact Mr. Buttiglieri at 248.740.5696 or click here to send an email.
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