The term "Estate planning" conjures up a lot of misimpression. It's not uncommon for people to say "I'm not rich like Bill Gates, so why do I need estate planning?" or "I'm young and in good health, so why do I need estate planning?" The fact is, you don't have to be rich, elderly, or in poor health to need basic estate planning. Estate planning is important and necessary for every adult.
The fact of the matter is that estate planning is about the three P's: Protection, Prevention and Peace of Mind. It's about having certain documents in place that will provide protection in the event of illness, injury, or incapacity. These documents will help prevent your estate from going through probate and they will prevent a court from deciding important matters for you or on your behalf.
What happens if you have a debilitating illness or injury and are not able to make medical decisions or to speak on your own behalf? Who will protect you and be able to act for you? If you have a Power of Attorney for Healthcare, you can designate a person or persons to speak with your doctors, to make medical decisions, and to authorize treatment. If your medical condition is catastrophic such that you are terminal and in an end-of-life condition, if you have a Declaration of Living Will, you can express what your desires would be and you can appoint a person to speak up for you. A Living Will is the document that was unfortunately missing in the case involving Terry Schiavo. If she had had one, her desires would have been expressed and she could have specified who could speak for her.
Similarly, if you have a debilitating illness or injury and are not able to take care of personal, business or financial matters, who will be able to act on your behalf? If you have a Durable Power of Attorney, you can designate a person or persons to act for you. They will be able to do things like pay bills, do your banking, and deal with your insurance company. If you're laid up in a hospital or rehab facility, you may be unable to take of these basic necessities. If you have a Durable Power of Attorney, your designated agent can do these for you.
In the event of your death, if you have a Last Will & Testament, it protects your wishes by allowing you to do such things as designate who will receive what you own (your beneficiaries), who will be in charge of your estate (the Personal Representative) and who will raise your minor children (the Guardian). If you do not have a Will, upon your death, a court will have to decide these in accordance with Florida law. Wouldn't you rather be the one deciding these matters than having a judge decide them for you? You know your family and loved ones; a judge does not.
While a Will does provide protection and does prevent having matters decided for you, it has one major drawback. In Florida, a Will does not avoid probate. Instead, a Will simply tells a probate court things like who are your beneficiaries, who will oversee your estate, and who will be Guardian for your children. In order to make sure that your estate does not go through probate, you will need a Declaration of Living Trust (sometimes also called a "Revocable Trust"). This type of Trust accomplishes the things that a Will does, but it allows your assets held in the Trust to be devised without probate. So, for example, if you own a home in your individual name and you die, a probate will be necessary to transfer or sell the home. Your Will specifies what is to happen with the home but the probate court will be the one to implement your instructions. If you own the same home in your Trust, the home can be transferred or sold without probate. This can save significantly on time and money.
Ultimately, having these five documents in place gives peace of mind knowing that your "ducks are in a row." Your family, your estate, and you are all protected and you will have prevented a court from having to decide important matters for you.