(Source: Forbes): Mark Eghrari – Do you need to be rich to need an estate plan? Absolutely not. At the most basic level, during your lifetime an estate plan allows someone you trust to make decisions on your behalf if you are unable to do so yourself, and after your death, ensures that your assets and your wishes are carried out as smoothly as quickly as possible.
When you think about it that way, everyone needs an estate plan.
Fortunately, a basic estate plan includes just a few simple elements.
For starters, you (and, if applicable, your spouse) should have a General Durable Power of Attorney, a Health Care Power of Attorney, a HIPAA authorization, and either a Will or, better yet, a Revocable Living Trust.
- A General Durable Power of Attorney allows your “agent,” the person you choose to act on your behalf (your agent can be your spouse), to make financial decisions if you are incapacitated and unable to do so. For example, he or she could sell a tangible asset (one in your name) to pay bills.
- A Health Care Power of Attorney gives your agent the authority to make health care decisions for you. For example, your agent can make decisions about end of life care, or whether to continue life support, or what kinds of treatment you would wish to receive. (You can, of course, spell out your wishes to your agent ahead of time so he or she knows exactly what to do in different situations.)
- A HIPAA authorization allows your agent to obtain medical information about you. Because of privacy laws, without a HIPAA authorization other people cannot receive information about your condition, prognosis, etc. A HIPAA authorization lets your family, and anyone you have put in charge, to get the information they need about your condition.
- A Will allows you to distribute assets and name guardians for any minor children. A Will is certainly better than no plan at all, but a Will must go through probate, an often lengthy and expensive process. A better option is often a Revocable Trust, an estate planning tool that avoids the delay and cost of the probate process. Plus, a Revocable Trust keeps your affairs private. (A Will is a public document.)
So no, you don’t have to be rich to need an estate plan. The goal of an estate plan is to provide security for you and your family. When you think of it that way, wealth has nothing to do with it at all.