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5 Legal Tips for Peace of Mind

Editor’s note: This is a guest from Andrew Flusche, a lawyer and blogger.

Legal issues don’t have to be stressful. In fact, you can use the law to reduce your risk, eliminate uncertainty, and plan for the unthinkable. The law can help with your overall peace of mind.

1. Execute a will

Estate planning isn’t just for wealthy old people. If you’re an adult, you need an estate plan. This spells out what happens to your property when you die. While the law provides default rules for people who don’t specify their intentions, you might be surprised by what those rules say.

For the average person, an estate plan is simply a will (or “last will and testament”). This document spells out who gets what from your estate. Your handwritten will can be valid, but it’s safest to have a lawyer draft your will and walk you through the formal execution ceremony. If you have a spouse or children, you really need a will to ensure they are properly taken care of.

2. Designate your health care wishes

How should medical decisions be made for you in the event of an accident? Without the appropriate legal papers, your next of kin will attempt to make the decisions that you would want. But does he or she know all your wishes?

You should protect your health care decisions by at least appointing a health care power of attorney. This designates the person who will make your decisions. They are bound to make the decisions that you want, not what they think is best.

To go the extra mile, you can execute a living will. This document attempts to set forth your wishes for different medical scenarios. Then your health care agent will be bound to act according to this document. If you neglect both of these health care documents, your life might be in the hands of someone you don’t trust.

3. Select the correct beneficiaries

Do you have a life insurance policy or retirement plan? Who are your beneficiaries? If your estate is listed as the beneficiary, your heirs could be in for a surprise when you pass away.

Life insurance and retirement plans automatically pay the designated beneficiary when the policy holder dies. To make sure your family or other heirs get this money, you should designate them by name as the beneficiaries. If your estate gets paid directly, the true beneficiaries will be in for a long wait before they can be paid anything. And your creditors might claim the money before anyone else can be paid. Those beneficiary blanks are critical.

4. Get insurance, even if you rent

Property insurance isn’t just for homeowners. Even if you rent, you need insurance protection. Homeowner’s or renter’s insurance primarily covers against loss to your property due to damage or theft. But it can also be important if you’re ever sued.

When guests come onto your property, you legally take on a certain amount of liability for their safety. If a guest is injured while on your property, you could be held responsible. Fortunately, the typical property insurance policy provides some protection for you. Guest medical coverage will pay for your guest’s medical bills. For the cost of a renter’s insurance policy (at most $15/month), you can’t afford to neglect this coverage.

5. Separate your business

If you run your own business, you should consider a limited liability business entity. Running a sole proprietorship is simple, but it exposes you and your family to certain risks. Creditors and people you have possibly wronged can come after you personally. Your business could be putting the family home at risk.

To solve this problem, you can easily setup a basic corporation or a limited liability company (LLC). Then when you sign contracts and incur business debts, you are only putting the business on the line. It’s important to run the business properly to maintain your liability shield. But without the formal business entity, you have no hope of limiting your personal liability.

Andrew Flusche is Virginia lawyer who helps people plan for the future. He’s holding a webinar on Sept. 4 about reducing your business liability.

5 Legal Tips for Peace of Mind

Editor’s note: This is a guest from Andrew Flusche, a lawyer and blogger.

Legal issues don’t have to be stressful. In fact, you can use the law to reduce your risk, eliminate uncertainty, and plan for the unthinkable. The law can help with your overall peace of mind.

1. Execute a will

2. Designate your health care wishes

3. Select the correct beneficiaries

Do you have a life insurance policy or retirement plan? Who are your beneficiaries? If your estate is listed as the beneficiary, your heirs could be in for a surprise when you pass away.

4. Get insurance, even if you rent

5. Separate your business

Andrew Flusche is Virginia lawyer who helps people plan for the future. He’s holding a webinar on Sept. 4 about reducing your business liability.

Posted on 2 September 2008 in Happiness, Simplicity |
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Comments (24)

"Motivate Thyself" Says:

September 2nd, 2008, 19:48 pm

My wife and I have had life insurance since we were in our early twenties. It’s worth the sub-$50 price tag to know we’ll be taken care of if the unthinkable happens.

In regard to #5, I have liability insurance for my business. Even and LLC won’t cover your legal costs if you get sued. So having this coverage is just as, if not more important than the LLC itself.
Solid post and good info.

Writer Dad Says:

September 2nd, 2008, 20:11 pm

I’ve done all of these except designate my health wishes. It seems so obvious, but I’ve never even thought of it. Thanks.

DavidinJapan Says:

September 2nd, 2008, 20:20 pm

I’m very interested in hearing more about #5. I’ve often thought, and talked with friends, about starting my own business, but I really have no idea how–especially in Japan! I have often heard from others that if you set up the business right then even if it fails you aren’t out any money, yet I didn’t have the foggiest how to do this. Thanks for giving me a pointer in the right direction.

The Daily Minder Says:

September 2nd, 2008, 20:42 pm

Nice list.

I would also add “take care of your tax”. There is nothing worse than worrying about your tax return or tax bill for months on end.

A good accountant is really valuable.

The Daily Minder

Shanel Yang Says:

September 2nd, 2008, 20:44 pm

All great suggestions! And, for those of you who are not yet married or newly married, do consider the pros and cons of prenups or antenups. It’s not just for the rich. Bad things happen to good people — even many good poor people — that these simple contracts can protect you from. See “Who Needs Prenups?” at http://shanelyang.com/2008/07/11/who-needs-prenups/

Jeff@MySuperChargedLife Says:

September 2nd, 2008, 20:46 pm

Excellent suggestions! The key on all of these is not to wait until it is too late. It seems like most of us procrastinate and fail to get these things done like we should. Thanks for the reminder!

mark_hayward Says:

September 2nd, 2008, 21:18 pm

Andrew - fantastic suggestions! I might be contacting you about the LLC structure as we are currently running our business as a DBA.

Zendad Says:

September 2nd, 2008, 21:41 pm

Very good points! I unfortunately have had to be executor of two wills. On my mom’s I was also in charge of her personal care (health care wishes). I can’t tell you how valuable it is to have everything spelled out clearly. It makes the very difficult job of executing a will a little easier to do!
The Daily Minder: very good point on keeping your taxes in order!
Zendad
http://www.zendad.net

MikeC Says:

September 2nd, 2008, 21:58 pm

When starting my business I didn’t think of getting an LLC. But that was until I talked to a friend who also happened to be a lawyer. After hearing some horror stories going the LLC route was the right choice.

Stephen Says:

September 3rd, 2008, 0:20 am

Sound advice! As a reformed accountant I could not agree more with point 5. Separate your business.

Cheers!

Shamelle - TheEnhanceLife Says:

September 3rd, 2008, 0:27 am

Great list.
#2 is the most important one for me.

I agree with The Daily Minder. Tax is also something that
needs to be looked at.

Shilpan | successsoul.com Says:

September 3rd, 2008, 0:33 am

Have enough liability insurance and worker’s comp insurance if you own a business.

Roy Says:

September 3rd, 2008, 2:32 am

It’s also very important for peace of mind.

Ignoring what we don’t have, looking the things we have & enjoy the fullest.

Ryan @ Smarter Wealth Says:

September 3rd, 2008, 2:38 am

Never realised you could get property insurance if you are renting. This is a very helpful peice of advice.

Running a blog on finance and entrepreneurialism I need to have my finances in order. This has helped me do that

Hot Per Says:

September 3rd, 2008, 4:14 am

Thanks for the great post. It really gives us something meaty to chew on.

Tammy Lenski Says:

September 3rd, 2008, 5:02 am

I just want to echo Andrew’s advice wholeheartedly. My heart still aches from mediating countless end-of-life disputes between family members of people who did not have clear health care directives and estate disputes of people who left no wills. The pain and damage suffered by families as individuals in them struggle to do what they each think the person in question would have wanted them to do leaves so much debris that could be avoided.

Marley Says:

September 3rd, 2008, 9:27 am

I have been a CPA for almost 15 years and agree with most of your points.

Number 1 - Make sure you have a will especially if you have minor children.

Number 5 - LLC’s are nice but I like an S-Corporation better. Both still offer the limited liability for the owners but with an S-Corp you can minimize self employment tax.

With S-Corps the owners or stockholders must take a reasonable salary however it can be less than the total profits of the entity.

Profits of an S-Corp are not subject to self employment tax.

Marley
http://yourfriendlycpa.blogspot.com

Leanne Says:

September 3rd, 2008, 11:05 am

I couldn’t agree with you more, especially in relation to medical issues and the living will. I’ve personally witnessed more than one family member placed on a “care pathway” as it’s referred to here in the UK and it’s a disgusting, barbaric way for a human being to be treated.

Remember, doctors are obliged to keep you alive by any means necessary, but alive and living are two entirely different things.

Sorry, went off on a mini rant there.

LegacyDaily Says:

September 3rd, 2008, 11:24 am

Having a few good attorneys in case you need them is #1. These must be people you trust. The basics are mentioned here but legal issues tend to be very complex in some cases.

chris Says:

September 3rd, 2008, 12:48 pm

If you have a business, it’s a good idea to have some type of legal advice or legal services as a part of your monthly expense. It will save you a lot of headaches in the long run.

janelle Says:

September 3rd, 2008, 13:53 pm

I think that number 1 is probably the most difficult thing for a lot of people to do because it reminds them of their own mortality..but while it is difficult, I’m sure it makes you ten times better just knowing that it’s done…

Laura Says:

September 3rd, 2008, 15:10 pm

I second (or third or fourth or whatever we’re up to now :-) tip #4. Renters’ insurance is really important! Your landlord should carry insurance on his property — but it does not cover your possessions on that property. We rent a house. The house got burgled. The landlord fixed the window. Our renters’ insurance paid us for the items that were stolen. And remember — burglars go for the expensive items; that’s why they’re breaking in!

Liara Covert Says:

September 3rd, 2008, 18:29 pm

My own experience is that when it comes to unexpected conflicts, life will throw you situations to test you. Learning to forgive as well as the power of compassion are lessons that empower you to move beyond referring to some applications of law. The tips offered in this post are useful, but it is also imperative to be open to learning about where the legal profession is approapriate or inappropriate to draw from as your life unfolds.

quench Says:

September 10th, 2008, 11:35 am

This comment is coming a little late, but almost no one ever mentions something else that you prepare in case of death: how to access and what to do about your on-line identity!

Especially if you run a blog or business on-line (or even just use email), how will your executor be able to access your passwords, notify your audience, or anything else? what do you want done with your online data??

I’ve spoken to a few people about this issue, and no one seems to think it requires any thought or preparation. Why? I’d love to see a post devoted to this issue…. Thanks.