Estate planning is a great way to make sure your loved ones are looked after and protect your assets if you become incapacitated or die. However, many people neglect to plan for their own incapacity, which can have serious financial consequences.
The cost of long-term care
Your estate will be responsible for the cost if you become incapacitated and require long-term care. Long-term care can be very expensive, and if you haven’t planned for it, your estate may not be able to cover the cost. For instance, one of the biggest financial costs of incapacity is the expense of nursing home care. Nursing home care can cost thousands of dollars per month, and if you don’t have long-term care insurance, your estate will be responsible for paying those costs.
The cost of lost income
If you become incapacitated and cannot work, your income may suffer. This can have a major impact on your ability to maintain your standard of living. Additionally, if you have dependents, their standard of living may also suffer because of your lost income. If you have children, they may need to attend daycare or after-school programs, which can also be expensive.
The cost of estate administration
If you die without a will or other estate planning documents, your estate will have to go through the probate process. Probate can be expensive and time-consuming, and it can tie up your assets for months or even years. Also, the court will appoint a guardian if you have minor children, and the cost of that guardianship can be expensive as well.
To avoid these costly consequences, it’s important to plan for your own incapacity. This includes creating a solid estate plan that includes provisions for long-term care and income replacement. You may also want to understand the process of probate and how to avoid it if possible. By planning for your own incapacity, you can protect your assets and be certain that your loved ones are cared for.