“When you fail to plan, you plan to fail.”
That familiar saying has been around for a long time, often used in reference to significant challenges such as running a business or creating military strategy, but the expression also is true for individuals in everyday circumstances.
The ability to plan effectively impacts almost every phase of life – your family, home, education, career, even your diet and your vacations. Life naturally is unpredictable, of course, but realistic plans can help you be ready for whatever comes along. That explains the popularity of another common phrase: “Plan B.”
However, many successful and intelligent people fail to plan adequately for their later years. It may be easy to get complacent about your future after a well-lived life, when the kids are grown and you are financially secure, but then what lies ahead?
For one thing, you definitely need contingency plans to address your own future health care priorities. You also should have a plan about where your property and assets will go when you die. It is imperative to make your preferences known and have them legally recorded.
Living wills and living trusts can simplify many critical later decisions for you and your loved ones. Living wills and living trusts both serve similar purposes of fulfilling your personal wishes if you are incapacitated, although there are important differences in the benefits the documents provide.
A living will specifies your health care choices
A living will is a legal agreement that clearly defines the medical procedures which you would or would not want to be performed on you if you can no longer speak for yourself. This can occur if you are gravely ill, seriously injured, comatose, or mentally impaired. The living will also officially designates someone (a family member, friend, or attorney) to represent your wishes when the decision-making time comes.
Vital choices to be made in such circumstances may include CPR, a mechanical ventilator, a feeding tube, pain management, or aggressive antibiotic treatment. With a living will, your selected loved ones can instruct medical personnel to follow your earlier stated decisions. A living will also can provide any directions about organ donation.
Living wills are considered “advance directives” – i.e., any legal documents which allow individuals to specify their future health care preferences, such as a health care Power of Attorney.
A living will can be tremendously helpful, but a 2014 study by the American Journal of Preventive Medicine noted that only about 26 percent of adults in the U.S. have any advance directive.
Living trusts simplify asset protection
While a living will directs your loved ones about honoring your health care wishes, a living trust provides instructions for managing your finances and assets.
A living trust essentially works the same way as a traditional “last will and testament” in the sense that you – while you are still alive – get to legally decide what will happen to your property when you pass on. That means you have opportunities to write down and certify who receives what assets when your estate is later transferred to your dependents, heirs, charities, etc.
The significant difference is that a will only takes effect after you die. A living trust avoids the expensive and time-consuming probate process, because your appointed trustee serves the role of a will’s executor by fulfilling the wishes you wrote into the trust. Having the proper legal plans will also ensure that more of your estate goes to your inheritors and not the courts.
Just as importantly, the trustee can make decisions regarding your assets if you become incapacitated from illness or injury. In other words, you may have made certain prior requests about dispersal of your assets upon your death; however, if you are still alive but unable to manage your financial and legal affairs capably, your trustee can then take responsibility for awarding those behests to the eventual beneficiaries as you would have wished.
There are various types of living wills and many related ways for them to address such issues as taxes, retirement accounts, and life insurance. An estate planning attorney can explain the differences to you.
Insist on qualified professional advice
The experienced attorneys at Cordell Planning Partners affordably can establish a living will, living trust, health care Power of Attorney, and other essential legal documents for you. We also can incorporate them into a larger, comprehensive estate plan to help protect you and your assets for the future.
Cordell Planning Partners even offers free educational workshops, where we explain a range of estate-planning options and other critical legal strategies, all in terms that are easy to understand.
To learn more, contact us about a free estate plan analysis to discuss your needs.