zen habits : breathe

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.



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