An estate planning myth shared by many childless couples goes something like this, “We don’t have any kids, so why would we need an estate plan? Whichever one of us lives longest will just inherit everything we own.”
The rationale behind this notion is understandable because it embodies another myth about estate planning, namely, that estate planning is only good for passing assets to heirs after death. The truth is that a comprehensive estate plan can accomplish much more than asset distribution – an estate plan can help you in vital ways during lifetime.
For example, when it comes to paying for in-home care, an estate plan can help you leverage your assets or access public benefits in order to stretch your savings, and stay home longer. In-home care, assisted living, and nursing home costs are already high in Massachusetts and climbing ever higher.
In addition, your estate plan can determine how your medical and financial affairs will be handled if you or your spouse (or both) become incapacitated. This requires two essential documents everyone should have:
Health Care Proxy
A health care proxy allows you to designate an “agent” to make healthcare decisions for you in the event of incapacity or if you are otherwise unable to speak for yourself. You must make sure that the agent, in many cases the “well spouse,” knows in advance exactly what type of care you do and do not want in a specific situation.
Durable Power of Attorney
Similar in concept to a health care proxy, a durable power of attorney lets you appoint an individual to handle your financial and other affairs if you are unable to do so yourself. Again, many people name their spouse to perform this vital role.
Of course, when one of you passes away, you’ll need to choose an appropriate person, someone you trust, to serve as the surviving spouse’s agent and/or durable power of attorney.
You’ll also want to have a HIPAA authorization. This document allows you to specify who has access to your medical information (and who does not). Without a HIPAA authorization, your spouse may not be able to get information about your condition in an emergency.
And finally, after you both pass away, be aware that without a will or trust, all assets will be distributed to the family of the second spouse to die. If you prefer a different distribution, for example, including family of the first spouse to die, or charities, you will need an estate plan.
As you can see, everyone should have an estate plan, including couples without children. As always, I am here to help you design one.
Until next time, take care….